California: Where troubled loans go to die

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Check out this excellent piece of analysis by my enterprising colleague Tom Petruno today over at his latimes.com blog, Money & Co., taking a closer look at today’s foreclosure numbers, and what they say about California. In short: troubled loans are more likely to go into foreclosure if they’re in California.

From Tom’s post: ‘California actually ranked below the national averages on delinquencies. A total of 16.9% of sub-prime loans in California were delinquent at the end of the first quarter, down from 18% in the fourth quarter.

The prime-loan delinquency rate for California was 3.52%, up modestly from 3.43% in the fourth quarter.

But Jay Brinkmann, research chief at the mortgage bankers’ group, says the problem in California is that delinquent loans have less of a chance of being cured than in other parts of the country because of the severity of the price declines here. In other words, delinquencies are more likely to turn into foreclosures in the Golden State.

The first-quarter data bear that out: The percentage of the state’s prime loans in foreclosure soared to 1.49% as of March 31 from 1% three months earlier.

The national prime-loan foreclosure figures, for comparison: 1.22% as of March 31, up from 0.96% in the fourth quarter.

For sub-prime loans, the state’s foreclosure percentage surged to 14.6% from 10.6% at the end of last year, compared with national rates of 10.74% and 8.65%.’

Read Tom’s entire post here.

Thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: Los Angeles Times.