For
immediate release
Business editors/real estate writers
California Mortgage Defaults Trend Down Again
La
Jolla, CA.—— The number of mortgage default notices filed against California
homeowners fell last quarter compared with the prior three-month period, the
result of lenders’ evolving foreclosure policies, an uncertain legislative
environment and an uptick in the number of mortgages being renegotiated, a real
estate information service reported.
A
total of 111,689 default notices were sent out during the July-through-September
period. That was down 10.3 percent from 124,562 for the prior quarter, and up
18.5 percent from 94,240 in third quarter 2008, according to San Diego-based MDA
DataQuick.
The
number of recorded default notices peaked in the first quarter of this year at
135,431, although that number was inflated by deferred activity from the prior
four months.
“It
may well be that lenders have intentionally slowed down the pace of formal
foreclosure proceedings. If so, it’s not out of the goodness of their hearts.
It’s because they’ve concluded that flooding the market with cheap foreclosures
in this economic environment may not be in their best financial interest. Trying
to keep motivated, employed homeowners in their homes might be the most
cost-efficient way to stem losses,” said John Walsh, DataQuick
president.
The median origination month for last quarter’s defaulted loans was July 2006,
the same as during this year’s first and second quarters. A year ago the median
origination month was June 2006, so the foreclosure process has moved one month
forward during the past 12 months.
“There’s a batch of truly nasty loans that were made in mid 2006. There’s
another batch made in late 2006. These are worse than the mortgages before and
after, and it’s taking a long time to process them,” Walsh
said.
The lenders that originated the most loans that went into default last quarter
were Countrywide (7,583), Washington Mutual (5,146) and Wells Fargo (4,425).
Along with Bank of America (1,979) and World Savings (4,237), they were also the
most active lenders in the second half of 2006. Last quarter’s default rate on
loans originated in the second half of 2006 ranged from 1.7 percent for Bank of
America to 11.9 percent for World Savings.
Smaller subprime lenders had far higher default rates for that period: ResMAE
Mortgage was at 73.9 percent, Ownit Mortgage 69.5 percent, BNC Mortgage 61.4
percent, Argent Mortgage 59.9 percent and First Franklin 59.4 percent. While
these and most other subprime lenders are long gone, their loans were bundled,
resold and now live on as “troubled assets”.
Indeed, many, if not most, of the loans made in 2006 are owned and/or serviced
by lending institutions other than those that made the loans. The servicers
pursuing the highest number of delinquencies last quarter were ReconTrust Co,
Quality Loan Service Corp and Cal-Western Reconveyance
Corp.
While most foreclosure activity was still concentrated in affordable inland
communities, the foreclosure problem continued to slowly migrate into more
expensive areas. California’s most affordable sub-markets, which represent 25
percent of the state’s housing stock, accounted for 52.2 percent of all default
activity a year ago. In third-quarter 2009 it fell to 42.9
percent.
On
primary mortgages, California homeowners were a median five months behind on
their payments when the lender filed the notice of default. The borrowers owed a
median $12,665 on a median $343,200 mortgage.
On
home equity loans and lines of credit in default, borrowers owed a median $3,948
on a median $62,800 credit line. However the amount of the credit line that was
actually in use cannot be determined from public records.
San
Diego-based MDA DataQuick is a division of MDA Lending Solutions, a subsidiary
of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors
real estate activity nationwide and provides information to consumers,
educational institutions, public agencies, lending institutions, title companies
and industry analysts. Notices of Default are recorded at county recorders
offices and mark the first step of the formal foreclosure
process.
Although 111,689 default notices were filed last quarter, they involved 108,372
homes because some borrowers were in default on multiple loans (e.g. a primary
mortgage and a line of credit). Multiple default recordings on the same home are
trending down, DataQuick reported.
Mortgages were least likely to go into default in San Francisco, Marin and Santa
Cruz counties. The probability was highest in Merced, San Joaquin, and Riverside
counties.
Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled
50,013 during the third quarter. That was up 9.5 percent from 45,667 for the
prior quarter, and down 37.1 percent from 79,511 for third-quarter 2008, which
was the all-time peak.
In
the last real estate cycle, Trustees Deeds peaked at 15,418 in third-quarter
1996. The state’s all-time low was 637 in the second quarter of 2005, MDA
DataQuick reported.
There are 8.5 million houses and condos in the state.
Foreclosure resales continued to decline as a market factor, accounting for 42.8
percent of all California resale activity last quarter. It was 49.9 percent the
prior quarter, and a year ago it was 47.5 percent. It peaked at 57.8 percent in
the first quarter of this year. Foreclosure resales varied significantly by area
last quarter, from 9.6 percent in San Francisco County to 70.2 percent in Merced
County.
Of
the homes foreclosed on statewide in an 18-month period ending this July, about
82 percent have re-sold on the open market, while 18 percent, or more than
57,000 homes, have not. Of those that have not re-sold, it cannot be determined
from public records what portion is currently being marketed for sale, as
opposed to, among other things, being used as rentals or being left vacant and
not for sale. Over the past year California buyers have snapped up an average of
nearly 18,000 foreclosure resales a month.
A
year ago the percentage of forecloses that had not yet re-sold was about twice
as great, while the number of unsold foreclosures from the 18-month period
ending in July 2008 was about 50 percent higher than it is now.
(chart)
Notices of
Default
Houses and
condos
County/Region
2008Q3 2009Q3
Yr/Yr%
Los
Angeles
17,073 21,850
28.0%
Orange
5,692
7,436 30.6%
San
Diego
7,062
8,702 23.2%
Riverside
11,714
12,113 3.4%
San
Bernardino
9,110
9,833 7.9%
Ventura
1,676
2,146 28.0%
Imperial
568
692 21.8%
SoCal
52,895 62,772
18.7%
San
Francisco
353
607 72.0%
Alameda
3,482
3,940 13.2%
Contra
Costa
4,103
4,753 15.8%
Santa
Clara
2,814
4,035 43.4%
San
Mateo
797
1,263 58.5%
Marin
258
428 65.9%
Solano
1,934
2,164 11.9%
Sonoma
1,021
1,282 25.6%
Napa
265
340 28.3%
Bay
Area
15,027 18,812
25.2%
Santa
Cruz
342
419 22.5%
Santa
Barbara
593
739 24.6%
San
Luis Obispo
370
539 45.7%
Monterey
1,260 1,115
-11.5%
Coast
2,565
2,812 9.6%
Sacramento
5,541
6,098 10.1%
San
Joaquin
3,432
3,371 -1.8%
Placer
973
1,414 45.3%
Kern
2,774
3,166 14.1%
Fresno
2,202
2,758 25.2%
Madera
499
570 14.2%
Merced
1,399 1,245
-11.0%
Tulare
883
1,178 33.4%
Yolo
405
443 9.4%
El
Dorado
342
629 83.9%
Stanislaus
2,636
2,482 -5.8%
Kings
140
247 76.4%
San
Benito
202
210 4.0%
Yuba
307
312 1.6%
Colusa
68
62 -8.8%
Sutter
269
403 49.8%
Central
Valley
22,072 24,588
11.4%
Mountains*
526
932 77.2%
North
Calif*
1,155
1,773 53.5%
Statewide*
94,240 111,689
18.5%
-30-
*Includes other
counties
Trustees Deeds by county and
region can be found at dqnews.com
Media Inquiries: Andrew
LePage (916) 456-7157