From: Andrew LePage [alepage@dqnews.com]
Sent: Tuesday, October 20, 2009 9:21 AM
To: 'Becky Beavers'
Subject: DataQuick: California Q3 2009 Foreclosure Activity

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