The California realtors report on February sales. "Home sales decreased 9.6 percent in February in California compared with the same period a year ago, while the median price of an existing home increased 5.7 percent, CAR reported today. 'Next month’s report could tell a different story since sales last year peaked in March,' said C.A.R. President Colleen Badagliacco."

"'Statewide, the number of homes for sale increased slightly in February and remain just above the long-run average,' said C.A.R. Vice President Leslie Appleton-Young. 'The unsold inventory index stood at 8.8 months in February.'"

"In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 37 percent, or 129 out of 349 cities and communities, showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information."

The Orange County Register. "The median price of an existing single-family home in Orange County was down last month, making February the sixth of the past seven months to see year-over-year price declines, CAR reported today."

"The median price was $692,820, the association reported, down 3.9 percent from February 2006."

"Because the Realtor group derives its median prices from a different source than DataQuick, its figures differ slightly. DataQuick reported last week that the median price of an existing single-family home was $675,000 in February, which was down 2.2 percent from the median in February 2006."

"Joe Areias knows all about the pitfalls of subprime loans – both as a lender and a borrower. Over the past 10 years, the loan officer made a good living in the mortgage business, earning enough to buy his own Garden Grove condo four years ago."

"But Areias got behind financially last year after taking time off from work to care for his ill wife and new baby. As the mortgage business slowed, he struggled to make the payments on the subprime loan he refinanced into two years ago."

"In August when he was unable to refinance again after the teaser rate on his loan ended and his payment adjusted higher. This month when the only deal he had going with a client fell apart after a major subprime lender in Brea cut off its lending. On March 1, Areias received a foreclosure notice from his lender on his own condo."

"'Don't think you can just turn over your keys and walk away,' says Norm Bour, a Laguna Niguel mortgage expert."

"With home sales slowing and prices dipping in some areas, many desperate home sellers may face a so-called short sale, which is when the house is sold for less than the mortgage. Homeowners who have refinanced, however, face a different situation. A refinanced loan is considered a 'recourse' loan, meaning the lender can come after the borrowers personally for payment of any difference between the mortgage and the sales price."

"It's just like on a car loan,' says Bradford L. Hall, an Irvine CPA. 'You can hand over the keys to your car to the dealer, but you still have to pay off the loan.'"

"Many lenders opt not to take a homeowner to court to recover the money. Instead lenders write off the loss and send the IRS a Form 1099 for the so-called deficiency."

"The IRS treats the shortfall as income so the borrower will not only be out of a house, but will owe income taxes on the difference. And it is taxed at the ordinary income rate, not the typically lower capital gains rate. 'It adds insult to injury,' says Bour, the mortgage broker."

From KPIX 5. "The collapse of the subprime lending market is far from over, an Emeryville mortgage broker told a U.S. Senate committee holding hearings on an industry where banks have ordered some brokers to stop making loans altogether."

"'It will be more than a couple of days or weeks. It could go on for a few months,' said Cory Reid, past president of the East Bay chapter of the California Association of Mortgage Brokers."

"'There's still a number of non-performing loans out there, and companies who really shouldn't be around,' he said."

From Reuters. "Many subprime borrowers are in default or foreclosure because interest rates on their mortgages have reset following low initial levels. California may be hit hardest because higher loan payments are kicking in amid slowing home sales and flat or slipping home prices, experts say."

"'Outright price deflation is a risk factor that will drive defaults,' Glenn Costello, co-head of U.S. residential mortgage-backed securities at Fitch Ratings, said."

"'Our concern today is that the low home price appreciation environment is going to make it more difficult for borrowers to refinance,' Costello added."

"At the end of December, a fifth of mortgages in California were loans to subprime borrowers. State Attorney General Jerry Brown's office is keeping a close watch for reports of mortgage rescue offers to distressed mortgage holders, said Al Shelden, chief of the office's consumer law section."

"'It's certainly an interest of the office,' Shelden told Reuters in a telephone interview. 'We are worried there will be more of these as foreclosures increase.'"

"'There was a large uptick in these in the early '90s, the last time there was large increase in foreclosures,' Shelden said."

"'It's conceivable the lender will want to work with them,' Shelden said. 'Most lenders don't want to end up with a stockpile of 500 homes because for those that are federally regulated it will affect their ratio of good loans to bad, which is looked at as financial stability criteria.'"

"Homeless advocates expect more people to hole up in their cars as they lose homes due to the current subprime mortgage crisis. 'The subprime meltdown is the kind of situation that pushes people into cars. It's a very common story,' said Ruth Hollman, executive director of a non-profit in Los Angeles."

"'It's an old saying in the social services world that most people are one to six paychecks away from being homeless. But if you can't make your mortgage, it's more like a month or two. It's really fragile out there, particularly with the subprime situation,' said William Wise, a spokesman for (a) relief agency."

The Bakersfield Californian. "KB Home sold about 100 homes in Bakersfield last year. The company hopes to top that number this year despite a slowing market, said Augie Dent, president of KB Home's south valley division."

"'We need to recognize the new reality of the market and reposition ourselves accordingly,' Dent said. 'Our pricing is a function of the market.'"

"'We are actively pursuing other new communities,' Dent said. 'But we need to find them at a price level that makes sense with current market conditions.'"

From KERO 23. "Bakersfield is in it's first housing slump since 1998. Apraiser Gary Crabtree said Bakersfield has seen high levels of sales for the past four years, and now the market is correcting itself."

"He is confident prices on houses will go down. One reason for the surplus of homes on the market is an increase in foreclosures, Crabtree said. Crabtree said that comes from buyers using what are called 'sub-prime' loans."