California Mortgage Defaults at Three Year Low

July 21, 2010 No Comments »

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Mortgage defaults fell for the fifth consecutive quarter between April and June to the lowest point in three years, according to real estate data provider DataQuick.

A total of 70,051 Notices of Default (NODs) were filed during the second quarter, down 13.6 percent from 81,054 a quarter earlier and 43.8 percent lower than the 124,562 filed in the second quarter a year ago.

The peak for NODs was 135,431 in the first quarter of 2009.

“Obviously, motivated sellers and accommodating lenders have played a part in bringing the default filings down, especially when it comes to short sales, said John Walsh, DataQuick president, in a release.

“Public policy has also been a factor. We also need to remember that prices have come up off bottom over the past year. If they continue to rise, fewer homeowners will find themselves under water, which is a significant factor in letting a home go.”

Zip codes with sub-$300,000 median home prices saw 10.6 default notices for every 1,000 homes last quarter, compared with just 2.9 per 1,000 homes in zips with $800,000-plus median home prices.

Most Bad Loans Originated in 2006

The median loan origination month for last quarter’s defaulted mortgages was August 2006, with World Savings, WaMu, Countrywide, Wells Fargo, and Bank of America accounting for the most.

However, smaller mortgage lenders like ResMae, OwnIt, and First NLC had default rates of more than 65 percent, which expains why they no longer exist.

On primary mortgages, homeowners for a median five months behind on mortgage payments before the lender filed a NOD.

Borrowers owed a median $15,008 in back payments on a median $325,567 loan amount.

On home equity lines of credit and home equity loans, borrowers owed a median $4,187 on a median $65,740 credit line.

Repos Rises

The number of Trustees Deeds (TDs), where borrowers actually lose their homes, increased 11.2 percent to 47,669 during the second quarter.

The numbers are up 4.4 percent from the second quarter of 2009, though nowhere near the all-time peak of 79,511 in the third quarter of 2008.

TDs hit an all-time low of 637 in the second quarter of 2005, just before the mortgage crisis got underway.

(photo: wonderlane)

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