The Associated Press reports on California. "Russ Valone, the CEO of (a) research firm, said speculators in San Diego were putting deposits on downtown condo units under construction, assuming they could sell them at a profit when they were finished. 'There were guys out there that were rolling the dice just as if they were going to Las Vegas,' Valone said."

"When the market slowed, many buyers forfeited their deposits, or let their properties get repossessed by the banks. As a result, the inventory of unoccupied condo units downtown since early 2005 has soared fivefold, he said."

"Jason Beaver, a Sunnyvale, Calif.-based Apple Inc. programmer, got caught up in the talk of the hot housing market from friends. His name was drawn in a buyers' lottery in the Solera subdivision and he put $35,300 down on a $353,000 home in February 2004. The community is restricted to people age 55 or older; the 37-year-old Beaver had no intention of moving in."

"That summer, the housing market began to soften. He nervously put the house on the market for a break-even price the same day escrow closed. He got no offers."

"A tight market had suddenly become flush with resale homes as investors sought to cash out. Pulte was one of several builders to slash new home prices, in some cases by as much as $80,000 in a single day. Beaver and others are suing, but the company has said it was simply reacting to new conditions in an overheated market."

"Beaver has been renting the home out for about a $1,000 a month, despite monthly expenses around $2,000. And the supply of available homes is growing."

"Beaver figures he has spent $50,000 on his investment home, and will have to come up with $30,000 more to pay off the mortgage after he sells it at a loss."

"While he's not completely sworn off real estate investing, Beaver said next time he'll try a more traditional approach, to buy and hold for the long term. 'The fast-growth, make-a-quick-buck real estate investment, I don't think I'll try again,' he said."

The Union Tribune. "A record number of San Diego County residents lost their homes in the first three months of the year as default and foreclosure activity rose throughout the state."

"In San Diego County, 1,182 foreclosures took place from January through March, according to DataQuick. The first quarter also recorded 3,931 notices of default, the first formal step in the foreclosure process, DataQuick reported."

"Most loans that went into default in California during the first quarter were originated between April 2005 and May, as a peak of nearly 78 percent of all first trust-deeds were being financed with adjustable-rate mortgages."

"First-quarter foreclosures in Riverside County rose 166 percent compared to same quarter last year. A total of 9,407 foreclosure filings were reported in Riverside County, compared to 3,539 in the first quarter of 2006, according to RealtyTrac."

"Taken together, Riverside and San Bernardino counties represented the third-highest-ranked metropolitan area in the nation for foreclosure activity. Combined, the two counties experienced a total 17,499 property foreclosures between January and March, RealtyTrac said."

"'Certainly the surge in subprime defaults has contributed to the overall rise in foreclosures,' RealtyTrac CEO James Saccacio said. 'We estimate that more than 50 percent of the foreclosure activity we charted in the first quarter was from subprime loans. However, it's not just low-end homes that are going into foreclosure; we're seeing a rising percentage of foreclosures with an estimated market value of more than $750,000.'"

The Sun Post. "Foreclosures have picked up speed in San Joaquin County, where the number of homes to hit the auction block has reached more than 12 times last year’s levels. Through March 2007, 539 homes were sold in the county’s courthouse auctions. Compare that with just 44 in the same period in 2006, according to a tracking service based."

"And with the biggest rise of the past two years coming in March, when auctioned homes jumped from 172 to 234 per month, a trend expected to continue. 'We don’t see any signs of a peak at this point,' said Sean O’Toole, a real estate consultant who has followed the foreclosure market the past five years."

"When prices stopped climbing last year, many buyers found themselves stuck with loans they could never afford in the long term. It’s a situation some lenders had ignored the past several years because the housing market was able to satisfy everyone, said local mortgage broker Deborah Romero."

"'A lot of common sense went out the window when real estate became so valuable,' she said."

"Judy Thompson, a housing counselor in Stockton, said that lack of common sense has meant that a lot more people show up at her office in a disastrous financial state. She said she now deals almost exclusively with people who took out sub-prime loans."

"'What I find is that people that have got into some of these predatory-type loans have no idea what they got in it,' Thompson said. 'They listened to their lenders, and their lenders say, 'Don’t worry, you qualify for this loan.' And they’re shocked when they find out they now owe thousands of dollars.'"

"Some of her clients face mortgage payments nearly equal to their income, while at the same time, their houses have gone down in value. At that point, there’s very little that can stop the property from going to auction, Thompson said."

The Bakersfield Californian. "Local law enforcers and real estate professionals say mortgage fraud litters Bakersfield's housing market."

"'It is very prevalent and it will become more prevalent," said Detective Frank Wooldridge, who handles real estate fraud cases and other financial and white-collar crimes for the Bakersfield Police Department. 'There is real estate and mortgage fraud going on in this town. To say it is not, you are just missing the boat.'"

"Last week, local appraiser Gary Crabtree told The Californian that he has documented about 20 suspicious local home sale transactions in the last year, and that the number has since grown to more than 50 as news of his allegations spread."

"'We've been presented with offers for well in excess of the sales price, asking for us to cut back to the buyer large amounts of cash,' said J.R. Lewis, sales manager with Watson Realty ERA."

"'The lenders are totally unaware they were defrauded until the property goes into default,' Crabtree said. He added that mortgage fraud has contributed to foreclosure activity that is now five times as common as it was last year in Kern County."

"'We get calls from a lot of people asking if we can do an appraisal and 'hit' a number for them,' said local appraiser Michael Burger. Burger said he tells the callers his business won't participate in such activity and they go elsewhere."

"Kern County homebuyers are running into mortgage trouble at three times the national rate, the eighth-worst track record in the country, new data show."

"'We appreciated way too fast,' said local appraiser Michael Burger. 'We had too many flippers, too many investors coming into the market.'"

"Kern County had 2,779 properties enter some stage of foreclosure in the first quarter of 2007, RealtyTrac reported. That represents a 106 percent increase from the previous quarter's totals and a 424 percent jump over the first quarter of 2006."

"'The last time we had something like this was in 1993, but it wasn't like this,' said Betty Byrom, owner of People Realty, who has been in the real estate business for 31 years. 'We're gonna have a lot more. It's gonna get worse before it gets better.'"

"Leslie Appleton-Young, chief economist for the California Association of Realtors, said inland areas of the state, such as Kern County, experienced some of the highest levels of new construction during the boom."

"But many bought with adjustable-rate mortgages that have since reset at higher interest rates. Some homebuyers who had planned on 'flipping' properties were caught when the market turned downward."

"Appleton-Young said areas such as Bakersfield have too small a population base and lack an economy with sufficiently high-paying jobs to absorb the current oversupply of homes."

"'That is why we are seeing an adjustment,' she said. 'Right now there is an oversupply. Long term, we can be very bullish in areas like Bakersfield, but in the short term it is going to take time to absorb all the supply.'"

"There were about 3,520 houses for sale in the Bakersfield area in March, according to the most recent single-family housing report by local appraiser Gary Crabtree."

"Byrom, the local broker, said there is now more than two years of inventory on the market. 'There's so many listings out there that you can pick what you want,' she said."