DataQuick: Calif. Defaults Hit Three-Year Low

Posted by Orb Staff on July 22, 2010 No Comments
Categories : Mortgage Servicing

mber of California homes pushed into the formal foreclosure process between April and June dropped for the fifth consecutive quarter to the lowest level in three years, reports [link=http://dqnews.com/Articles/2010/News/California/CA-Foreclosures/RRFor100721.aspx]MDA DataQuick[/link], a San Diego-based research firm. The declines were greatest in the most affordable areas, where foreclosure activity continues to fall from extremely high levels over the past two years. A total of 70,051 notices of default (NODs) were filed at county recorder offices during the April-to-June period. That was down 13.6% from 81,054 for the prior quarter, and down 43.8% from 124,562 in the second quarter of 2009. Last quarter's total was the lowest since second quarter of 2007, when 53,943 NODs were recorded. The peak was in the first quarter of 2009, when 135,431 homeowners received foreclosure notices. ‘Obviously, motivated sellers and accommodating lenders have played a part in bringing the default filings down, especially when it comes to short sales,’ says John Walsh, DataQuick's president. ‘Public policy has also been a factor. We also need to remember that prices have come up off bottom over the past year. If they continue to rise, fewer homeowners will find themselves underwater, which is a significant factor in letting a home go.’ While mortgage defaults spread from lower-cost sub-markets up into more expensive neighborhoods over the last year, that trend appears to be leveling off. The most affordable ZIP codes in the state, representing 25% of the total housing stock, accounted for 40.1% of all default activity last quarter – down from 40.9% the prior quarter and down from 44.9% a year ago. California's mid and high-end markets tended to see smaller quarter-to-quarter and year-over-year declines in mortgage defaults last quarter, the firm reports. However, the concentration of defaults remained much higher in the less-expensive areas: ZIPs with sub-$300,000 medians collectively saw 10.6 default notices filed for every 1,000 homes last quarter, compared with 2.9 per 1,000 homes in ZIPs with $800,000-plus medians. While many of the loans that went into default during second quarter were originated in early 2007, the median origination month for last quarter's defaulted loans was August 2006 – one month ahead of July 2006 for the prior four quarters. The lenders that originated the most loans that went into default last quarter were World Savings (2,982), Washington Mutual (2,547), Countrywide (2,532), Wells Fargo (2,177) and Bank of America (1,049). These were also the most active lenders in the second half of 2006, and so far, their default rates on loans in that period are well below 10%, DataQuick says. Smaller subprime lenders had far higher default rates for loans originated during that period. ResMAE Mortgage, Ownit Mortgage, Master Financial, First NLC Financial Services and Fieldstone Mortgage all had default rates of more than 65% of their originated loans. Most of the loans made in 2006 are owned and/or serviced by institutions other than those that made the loans. The servicers pursuing the highest number of defaults last quarter were ReconTrust Co, Cal-Western Reconveyance and NDEx West. The number of trustees deeds (TDs) recorded, which reflect the number of houses or condo units lost at the end of the foreclosure process, totaled 47,669 during the second quarter – up 11.2% from 42,857 for the prior quarter, and up 4.4% from 45,667 for the second quarter of 2009. The all-time peak was 79,511 in the third quarter of 2008. On average, homes foreclosed on last quarter took 9.1 months to wind their way through the formal foreclosure process, beginning with an NOD. That's up from 7.5 months for the prior quarter and 6.4 months a year ago. The increase could reflect, among other things, lender backlogs and extra time needed to pursue possible loan modifications and short sales, DataQuick says. Foreclosure resales accounted for 36% of all California resale activity last quarter – down from a revised 42.5% the prior quarter, and down from 49.9% a year ago. At formal foreclosure auctions held last quarter, an estimated 25.5% of foreclosed properties were bought by investors or others who do not appear to be lenders or government entities, representing a small increase from the prior quarter. SOURCE: [link=http://dqnews.com/Articles/2010/News/California/CA-Foreclosures/RRFor100721.aspx]MDA DataQuick

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