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Tuesday, October 20, 2009

DataQuick: California Mortgage Defaults Trend Down in Q3

by Calculated Risk on 10/20/2009 01:30:00 PM

There is a lot of interesting data in the DataQuick report. A few key points:

  • 2009 will be another record year for NODs.

  • Lenders have change policies and are trying to modify more mortgages.

  • 2006 was a toxic lending year (probably because that was when house prices peaked or were starting to fall).

  • Defaults are movin' on up into the mid and high priced areas.

    DataQuick NODs Click on graph for larger image in new window.

    This graph shows the Notices of Default (NOD) by year through 20091 in California from DataQuick.

    1 2009 estimated as total NODs to date, plus Q3 NODs (as estimate for Q4).

    Clearly 2009 is on pace to break the record of 2008. I'd expect something close to 500 thousand NODs for the entire year.

    From DataQuick: California Mortgage Defaults Trend Down Again
    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.
    While most foreclosure activity was still concentrated in affordable inland communities, the foreclosure problem continued to slowly migrate into more expensive areas. The state'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.
    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.
    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.
    emphasis added