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The rise in number of home loan defaults in California in June is expected to put more properties into repo foreclosed homes listings across the state, based on an analysis of state foreclosure data.

The percentage of delinquent mortgages in California has increased to about 10 percent of all mortgage loans, which means that one homeowner out of all homeowners with home loans across the state has missed monthly loan payments and has received a notice of delinquency.

In Los Angeles County, the percentage of borrowers in default is the same as that of the state, which is around 10 percent.

Notices of default are the first notices sent to homeowners when they miss their loan payments. This notice also marks the first stage of the legal foreclosure process.

Last June, the percentage of delinquent mortgage borrowers in Los Angeles increased to 9.9 percent of all homeowners with home loans, an increase from 9.5 percent in May. The default rate also marked a nearly two-fold increase from the 5.2 percent delinquency level in June last year.

Across California, 9.5 percent of all homeowners with mortgages were delinquent in June, an increase from the 9.2-percent level in May and a substantial increase from the 5.8-percent delinquency level in June last year.

What decreased in California and in Los Angeles County in June were completed foreclosures and the number of properties entering banks and lenders? foreclosed homes listings. In June, the repossession rate in Los Angeles County was 0.9 percent of all mortgage loans, a drop from the 1.2-percent level in June last year.

Across the state, the lender repossession rate was 1 percent, a drop from the 1.6-percent level in June last year.
Clearly, completed foreclosures and repossessions were lagging delinquencies.

Analysts say many banks are controlling their foreclosed homes listings to prevent sharp declines in home prices. Putting hundreds or thousands of their foreclosure properties in one batch would push down home prices to their lowest levels and would cause more bank losses.

Other banks say foreclosures are not yet showing in their foreclosures homes because they are complying with moratoriums imposed by federal and state governments. Many also say they are waiting for revisions in foreclosure prevention programs implemented by the federal government.

All the same, according to housing analysts, with the rising default rates across California, more residential properties are expected to enter foreclosed homes listings in the coming months.

More Long Island homes bought with nonprime loans are entering foreclosed home listings faster than in other parts of New York, based on a study carried out by the Government Accountability Office.

The study found that subprime loans, option adjustable-rate mortgage loans and alternative documentation loans originated by banks from 2000 to 2007 on Long Island and which are still on bank books totaled 69,654 as of March. Out of these loans, 28.1 percent or 19,572 loans are already in default by at least 90 days or are already on their way to foreclosed home listings.

According to GAO, the average default rate for the 5.2 million nonprime home loans across the country was 23 percent as of March.

Long Island?s Second Congressional District, which includes Suffolk and Islip, had the third highest delinquency rate in the state, with 33 percent. The Fourth Congressional District, which includes southwest Nassau and Hempstead, had the fifth highest delinquency rate, with 30.5 percent.

Representative Carolyn McCarthy of the Fourth Congressional District said that the entry of many homes into repossessed home is one of the most distressing results of the economic crisis.

Housing analysts said that Long Island had higher delinquency rates and distressed foreclosure home growth rates than many other places in New York because of financial industry layoffs, expensive housing and job losses in other sectors.

Based on the GAO report, the housing boom enticed many people to take out subprime loans, which were made for borrowers with poor credit records, and Alt-A loans, which were given to people who could not produce enough financial documentation because they were self-employed.

The GAO also found that 92 percent of all nonprime loans on Long Island which have become delinquent were taken out during the four-year period from 2004 to 2007.

The worst types of home loans that were made during those 4 years were the hybrid adjustable-rate loans. These loans assigned very low rates for the first couple of years and then reset to their higher fixed rates after the teaser period lapsed. GAO said these loans were prevalent in the subprime market, putting 38 percent of borrowers into delinquency as of March, ten percentage points above the delinquency rate for all subprime loans.

Option ARMs caused a delinquency rate of 30 percent, 13 percentage points above the rate for all Alt-A loans.
In the coming months, these delinquencies caused by nonprime loans will put more houses into foreclosed home listings on Long Island.

Sales of newly built single-family homes in June soared by 11 percent from May sales amidst repo homes lists, based on data released by the U.S. Commerce Department. The June increase was the highest monthly increase in almost 8 years, as buyers took advantage of lower home prices largely driven by the low prices of properties in repo homes lists.

According to the Commerce Department, the 11-percent monthly increase was far above the 3-percent increase predicted by economists for June new home sales. The adjusted annual pace of new home sales in June increased to 384,000 units, the highest level reached since November last year.

However, compared to new home sales in June last year, June sales this year marked a 21-percent drop. Sales of newly built homes are still being battered by the low prices of units in repo homes, New homes now stay in the market for almost one year before they are sold. In 2007, new homes stayed in the market for only about 6 months.

Economists say that despite the monthly rise in new home sales in June, the housing sector is still not recovering as expected.

In the Northeast, sales of newly built homes declined by 11 percent compared to sales in June 2008. In the West, new home sales fell by 10 percent while in the Southern States, new homes sales dropped by more than 33 percent. Only the Midwest experienced a rise in new home sales, with an increase rate of 6 percent.

While new home sales increased in June, their median price continued to decline, falling from $232,000 in June 2008 to $206,200 this June.

Economists expect new home prices to continue with their downward slide because of construction supply costs, competition from repo homes lists and low demand from potential new-home buyers.

MFR chief economist Joshua Shapiro said prices of newly built homes will continue to hover in the lower levels, especially in the upper price ranges.

Similarly, 4Cast senior economist David Sloan said that market recovery will be modest because of lack of improvements in consumer income levels.

According to economists, despite the rise in new-home sales for three months in 2009, the continued increase in unemployment rates, the lack of increase in wages and the tightness in home lending will drive the continued growth of repo homes lists and continued difficulties in the housing sector in the last months of 2009.

Both Pasco County and Pinellas County in Florida have jointly applied for a total of $50 million federal grant for the second round of the Neighborhood Stabilization Program. Pasco originally plans to use the federal money to buy and rehabilitate properties on foreclosure listing.

The city of Worcester in Massachusetts bore the brunt of the foreclosure crisis by having the highest number of properties on foreclosed homes list in the state in the first half of this year. The city also had the highest number of foreclosure filings.

With the nation battling growing repo house listings in almost every state, it is not surprising that state officials are turning to mortgage lenders and promoting legislation that will encourage, if not force, these lenders to work things out with their troubled borrowers.

The Federal Home Loan Mortgage Corp. or Freddie Mac, one of the government-controlled home mortgage financial institutions, has added new incentives for potential buyers of properties on forclosure listings.

The foreclosure market in Ohio was given a breather for the moment with the flattening of repossession rates. However, industry experts warned that the continuing problems in the home lending market may force forclosure listings to go up again.

The average price for homes sold in Birmingham in June would have been more than $220,000 if foreclosure listing prices in June did not average at a low of $80,273, according to real estate analysts in Alabama.

The percentage of repossession property sales in the Silicon Valley resale market in June was still high compared to the share of foreclosure sales in June 2008, based on real estate sales data in Santa Clara and in the San Francisco Bay Area.