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California has suffered considerably over the last year after witnessing a 131% growth in mortgage defaults and foreclosures. The record foreclosure activity has taken a toll on the historically vibrant California real estate market. California experienced a nearly 38% decrease in home sale prices last year.

The area of California hit hardest by the nation’s housing collapse is the southern portion of the state. Los Angeles County has statistically suffered the most foreclosure activity with over 120,000 homeowners losing their homes last year to mortgage default.

Although interest rates are down and home purchase activity has increased, many exerts believe the worst has yet to hit the golden state. Alt-A and exotic Payment Option Adjustable Rate Mortgages are beginning to adjust as homeowners buckling down for another wave of massive foreclosures in the first half of 2009.