California mortgage defaults at 3-year high
Silicon Valley/San Jose Business Journal - 3:11 PM PDT Wednesday
http://www.bizjournals.com/sanjose/stories/2006/07/31/daily55.html?f=et79&hbx=e_duMortgage defaults in California hit a three-year high in the second quarter, up more than 67 percent compared with the same period last year, a report said Wednesday. There were 20,752 default notices sent to homeowners in the state between April and June, a 10.5 percent increase from the first three months of this year, DataQuick Information Systems said.
"This is an important trend to watch but doesn't strike us as ominous," said Marshall Prentice, DataQuick's president. "The increase was a statistical certainty because the number of defaults had fallen to such extreme lows. We would have to see defaults roughly double from today's level before they would begin to impact home values much.
"We hear a lot of talk about rising payments on adjustable-rate loans triggering borrower distress. While there's no doubt some of that is going on, as far as we can tell the spike in defaults is mainly the result of slowing price appreciation. It makes it harder for people behind on their mortgage to sell their homes and pay off the lender." Other factors that contribute to higher defaults include the amount of equity owners have in their homes, the type of mortgage and how long the mortgage has been held.