Mortgage defaults up 67% in California

[Mister K]

http://www.marketwatch.com/News/Story/Story.aspx?siteid=netscape&dist=netscape&guid=%7B1075F84E-0DCE-4484-B8D2-024F9E64D029%7D

NEW YORK (MarketWatch) -- The number of defaults on mortgage payments rose to a three-year high in the second quarter in California, a 67% increase from the year earlier period, according to DataQuick, a real estate data-compiling firm.

Lenders sent 20,752 default notices to homeowners across the Golden State, up 10.5% from 18,778 the previous quarter and up 67.2% from 12,408 in the second quarter of 2005. Notices of default are formal documents filed with the county recorder's office which mark the first step of the foreclosure process.

The 20,752 defaults were the highest since 25,511 were filed in the first quarter of 2003.
"This is an important trend to watch but doesn't strike us as ominous," said Marshall Prentice, DataQuick's president. "We would have to see defaults roughly double from today's level before they would begin to impact home values much."

[MemphisTiger]

1. The news was talking about this last night

it seems to mosly be due to the rediculous adjustable rate mortgages. The rates are finally rising and now they have trouble paying the house note.

[zonkers]

2. My bro, a R.E. broker in Miami is in serious panic mode. His firm has not

had a closing in two months. It's a very small firm but they usually have 3-5 sales per month. The market has slowed to worse than a crawl -- its a trickle. 80 percent of new R.E. projects have been scratched. Rentals are still high but are expected to come down in price soon.

[wicket]

17. Best of luck to him

Very sorry to hear that :(

[gasperc]

3. maybe the number isn't ominous but as interest only's come due

and various other adjustable rate mortgages play havoc with people bank accounts on top of gas prices and home heating prices sucking that much more out of consumers you have, what the word??? a recipe for ...wait for it...DIASTER.

The future can't be know or controlled for that matter but with SO LITTLE GOVERNMENT OBLIVOUSNESS AND INACTION TO THE ISSUE, it's clear that a problem that could have been avoided will blow up in all of our faces. A democratic takeover, hopefully, will have come just in time

[bluerum]

4. Nothing to worry about though,,,,,

"This is an important trend to watch but doesn't strike us as ominous," said Marshall Prentice, DataQuick's president. "We would have to see defaults roughly double from today's level before they would begin to impact home values much."

:wtf:

He is worried about this impacting home prices! What about the people losing their homes? What a horses ass.

And the reason they are losing their homes? They can't pay their mortgage cause they can't get a decent job in this booming slave wages economy.

[kurth]

5. Many won't be able to file for bankruptcy either

The rules have changed, thanks to the GOP swines and our esteemed Democratic leaders in Congress.

[acmejack]

18. Don't worry they won't be able to find a meal in the City parks

In many American Cities. The People don't want those "people" hanging out in our 'Public Places'

[TexasLawyer]

19. Well, I'm not worried either!

[genieroze]

6. Who needs a house when da rapture isa commin.

[Joe Bacon]

27. Yeah, I bet home prices will tumble after THE GREAT FLOAT OFF!

Gee, I wonder how many properties in Beverly Hills will I be able to snap up the day after Jesus does THE GREAT FLOAT OFF of all the rich white Republican Christians?

[David__77]

7. I, in California, today decided I'm staying put.

No upgrading now... These prices are crazy, and I want to keep housing a low percentage of net income. People are crazily overextending themselves.

[redqueen]

8. doesn't strike him as ominous?

:wtf:

[kurth]

10. Nah. A 67% increase is statistically insignificant

according to sales professionals, especially those dealing in previously owned vehicles.

[redqueen]

11. Doesn't that depend on the increases or decreases around it?

A 67% increase in the first step in foreclosure proceedings which follows a fluctuation up and down for a while, sure that might not be so bad... but how have things been progressing in CA up to now?

[ozone_man]

23. Next year the rate will increase many fold.

I think we're just getting a hint of things to come, but we haven't got a look into the abyss yet.

[Gormy Cuss]

30. It's not. There is a year to year increase of 67%

BUT only 3 years ago, when the CA real estate markets were off the charts in terms of sales at high prices, the foreclosure rate was about 20% higher than the current quarter. The increase from 1st to 2nd quarter 2006 was 10.5%, not a huge increase but large enough to make analysts watch the next two quarters' results rather closely. Plus, in absolute terms the number of foreclosure notices as a percent of mortgages is still low. The analyst called it correctly. It's a number to watch but this one quarter doesn't represent an ominous sign by itself.

Having said all that, the bloom is off the rose out here and some markets are already starting to correct -- San Diego for certain, parts of other metro seem to be correcting too. We had a run of ridiculous price inflation in the past 5-10 years and every analysis showed it as unsustainable.

[displacedtexan]

9. I just started a new blog about the DC Housing Bubble.

It's not horrendously horrible here yet,
but you should read about the house next door if
you want an idea of what's going on here.

[zonkers]

12. Saw your blog. Nice. The firebug mcmansion bit is funny.

[displacedtexan]

15. Do you read the other housing bubble blogs?

If not, start with Bubble Meter
and you'll find lots of links in the sidebar.

[zonkers]

21. yup, thanks, I am really into it. fascinating.

[Laughing Mirror]

16. No more gentry left to gentrify good old Capitol Hill

A group of squatters might be interested in that house next door, however. Do you happen to have the address?

[Snivi Yllom]

13. great blog on housing and the coming recession

http://globaleconomicanalysis.blogspot.com/

[gratuitous]

14. "Doesn't strike us as ominous"

Well of course not, you're still making your mortgage payment, aren't you Mr. Prentice?

California is one of the most overheated segments in an overheated market. If they're looking at defaults bumping up, many markets across the country will be following soon.

Purely anecdotal observation, but I've noticed a lot more For Sale signs in some of the older neighborhoods in Portland OR than I have seen in a long time. Properties around Ladd's Circle don't change hands much as far as I've noticed, but biking through there yesterday, I must have seen half a dozen signs on houses. Some of the less well-kept properties, but even those go for $300,000 and up.

Clouds are gathering on the horizon.

[TheCowsCameHome]

20. See? The Bush economy is growing. Just like he says.

[judaspriestess]

22. People can file a bankruptcy

it has to be a ch. 13 - Repayment. Not a ch.7 (thats where you dump your debts) because you have to reaffirm your loan with the mortgage company so if you are in default then the mortgage company can continue the forclosure process which takes about 4 months once you get the notice because you can't reaffirm your loan because you are behind.


Once a ch. 13 is filed then they can pay back in the arrears over 3 or 5 years and continue with their regular scheduled payments. The forclosure process stops.

How do I know, after being laid off, I had to file a ch.13 to save my home. It sucks but credit can be rebuilt. It just took me a long time to find a job cause my credit was being checked and I got turned down for a few jobs. Even though my credit was stellar before this bullshit happened about 5 months ago. But I found a job, an excellent one so I can get back on track now. They reviewed my credit HISTORY and saw that I had no issues before so what I had disclosed to them corralated with how my credit is reflecting today.

[kineneb]

24. just finished

with our Ch. 7 - we have a very low mortgage payment, and were never behind on it, which is why we still have our house. We just had medical/card debts that we could no longer pay on Hubby's $1200/month disability check. So indeed, Ch. 7 is still possible, especially if one is very low income. As it was, my parents had to "loan" us money to pay off the Trustee, otherwise we would have lost our only functioning car. I don't worry about rebuilding our credit. As long as we are living on SSDI, there is no way we could pay off any debts. Goodbye middle class, hello food pantry.

On real estate- just read in the Sacto Bee about the forclosure rate in that area. Going up, with no end in sight.

[judaspriestess]

28. I have been in real estate for 5 years, new homes

licensed for 8. The problem is the skyrocketing prices on homes thus making payments friggin high.

Its the 100% financing loans that are going default. The 80/20's turn into adjustables after 2 or 3 years. People can walk away from a home now because they have nothing invested in them. Also you can buy a home 2 years after a forclosure. But really its the prices of the homes. My home in December was valued at 419K from 310K a year before and now its back to about 375K. Builders are dropping their INFLATED prices back down to reality as well as resales.
Investors screwed the Vegas market really bad and now home sales are at a crawl. There are alot of starving realtors out there right now.

[HockeyMom]

25. Packed up, vacant, and For Sale

Seeing SO MANY of those. Nobody is living there. The grass is 3 feet high, fliers all over the driveways, etc, etc. I have no idea how long these houses have been on the market or where their owners went. There are 3 just on my street, in addition to the 4 for sale still occupied.

When I was looking at rentals, I went to 3 places advertising for rent which had a For Sale sign outside. From the looks of the places, nobody had lived in them for sometime.

Think I would rent such a place? No, thanks.

[Anakin Skywalker]

26. Ah Hah Hah Hah!

"The economy is stroooooooong", our Esteemed Beloved God Sent Almight Leader G.W. Bush said.

[melm00se]

29. raw numbers can be deceiving.

while the number increase is rather significant, if you look historically, they are still, accordong to this article (http://www.ocregister.com/ocregister/money/housing/article_1232047.php) compared to historical standards.

That is no consolation to those impacted but from a big picture point of view, it could be a whole lot worse.

[soothsayer]

31. China will own alot of those foreclosures

[billyoc]

32. Wow, I might be able to afford a one-bedroom finally.

:eyes: