Things are looking up in the Golden State.
Last quarter, just 56,633 Notices of Default (NoDs) were recorded in the Southland, down 17 percent from the first quarter and 19.2 percent from the 70,051 seen a year ago, according to DataQuick.
It was the lowest level of activity since the 53,493 NoDs seen in the second quarter of 2007, just as the full extent of the mortgage crisis was coming to light.
So is this good news or just the result of artificial delays?
“A lot of theories are being floated as to why the numbers are down. Bank policy changes. Legal challenges. Politics. Holding back temporarily so as not to flood the market,” said John Walsh, DataQuick president, in a release.
“The fact of the matter is that no one really knows, outside of lending and servicing industry insiders. One thing is certain: Homeowner distress spreads fastest when home price declines are steepest. And it now appears likely that, barring some new economic shock, the worst of the price declines are behind us.”
Most Bad Loans Originated Between 2005-2007
The majority of the loans going bad today were originated back in 2005-2007, and the median loan origination quarter for defaulted loans is still the third quarter of 2006, when underwriting standards were poor at best.
For first mortgages, homeowners were a median six months behind on their mortgage payments when the mortgage lender filed the Notice of Default last quarter.
These borrowers owed a median $16,525 on a median $324,413 mortgage.
For second mortgages, including home equity loans and lines of credit, borrowers owed a median $4,382 on a median $65,000 credit line.
Mortgages were most likely to go into default in Kings, Sutter and Yuba county, while San Francisco, Marin and San Mateo county experienced the lowest default rates.
A total of 42,465 homes were actually lose from foreclosure during the second quarter, down 1.4 percent from 43,052 in the prior quarter and 10.9 percent from 47,669 a year ago.
Tip: Can I refinance with negative equity?