July 23, 2008

A Glimmer of Hope on the Foreclosure Front?

The big news on Tuesday was that California lenders issued a record number of notices of default — the first step in the foreclosure process — in the second quarter of ‘08, according to DataQuick Information Systems. From the DataQuick news release:

Mortgage servicers recorded 121,341 “notices of default” during the April-through-June period. That was up 6.6 percent from a revised 113,809 for this year’s first quarter, and up 124.9 percent from 53,943 in second-quarter 2007, according to DataQuick Information Systems.

Last quarter’s number of defaults was the highest in DataQuick’s statistics, which go back to 1992.

The only possible good news was the small increase from quarter to quarter, noted DataQuick president John Walsh:

“The small increase in defaults from the first to the second quarter may indicate that we’re nearing a plateau. We won’t know until the end of the year, but it may be that some lenders are starting to prioritize workouts with homeowners instead of grinding things through the foreclosure process. Of course, they may just be swamped and can’t handle processing any more paperwork,” he said.

Other tidbits:

– The median homeowner in default is five months behind on mortgage payments, with a median owed of $11,583 on a median $346,400 loan.
– The number of homes in default was about 3,000 less than the total number of defaults because some borrowers are defaulting on multiple loans.
– The default numbers represented a record in almost all counties, including Los Angeles County.
– Statewide, mortgages in San Francisco and Marin counties were least likely to go into default, and most likely in Merced and San Joaquin counties.

If you want to see how certain SoCal ZIP codes are faring on the foreclosure front, the L.A. Times has updated its list of home prices, sales and foreclosures to include the most recent numbers. You might be surprised which ZIPs recorded the biggest increases (hint:  Rancho Palos Verdes).   Click here.

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