Loan Defaults to Drive California Foreclosed Homes Listing

Posted on July 31st, 2009 in California

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.

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