California Mortgage Defaults Drop

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California Mortgage Defaults Drop

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It may seem that real estate news from California could not get any worse. So when a bit of encouraging news comes along, we want to make the most of it. For example: in the second quarter of this year Notices of Default (NOD's) were down almost 14 percent from the first quarter and down 44 percent from the second quarter 2009.

According to MDA DataQuick the second quarter total was the lowest in almost three years. "Motivated sellers and accommodating lenders played a part in bringing the default numbers down, especially with short sales," said John Walsh, DataQuick president. "If prices continue to rise, fewer homeowners will find themselves under water, which is a significant factor in selling a home," he said.

The trend of sub-market defaults, areas/zip codes with medians at or below $300,000, continues to decrease. Homes in higher value neighborhoods, medians $800,000 and above, have decreased and make up a larger percentage of total defaults statewide. Fewer low priced homes are receiving NOD's so now the number of higher value homes receiving notices, while relatively stable, is now a larger percentage of total NOD's.

Areas with $300,000 medians receive almost 11 default notices for every 1,000 homes. By comparison, areas with $800,000 medians recorded less than 3 NOD's for each 1,000 homes. Still, 6.1 percent of all default notices were filed in 15 of the highest priced coastal counties on homes with mortgages above $800,000.

While defaults have dropped across the state, the number of Trustees Deeds (foreclosures) has increased over 11 percent. During the second quarter, a total of 47,669 houses or condos were lost to the foreclosure process. While the number is high, it is still well below the peak of almost 80,000 TDs in the third quarter of 2008.

In the second quarter foreclosure resales amounted to almost 36 percent of all resale activity in the state. While difficult to precisely determine, foreclosed properties are being bought by investors or others rather than lender or government entities. For California, the market is definitely improving.

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Tags: • homeowners • short sales • selling a home • motivated sellers • foreclosure process • foreclosed properties • defaults • mortgage • california • mortgage defaults • california real estate •

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