Mortgage Defaults Rise in State
The number of California homeowners who received mortgage default notices increased in the first quarter to the highest level in more than two years, a real estate research firm said Tuesday.
Lenders sent 18,668 default notices to homeowners from January to March -- a 23.4% increase from the fourth quarter of 2005 and a 28.7% rise from the year-earlier period, according to La Jolla-based DataQuick Information Systems.
The rate of change in the six-county Southern California region was higher, DataQuick said. The number of defaults rose 33% year over year to 11,102 from 8,330. San Diego and Riverside counties saw the biggest jumps in defaults, more than 50%.
The notices serve as an early indicator of possible foreclosures and signal a shift in housing market trends.
The hike in first-quarter default notices coincided with a slowing in the state’s annual rate of home-price appreciation. The rate of price growth was 12.4% in the period, off the peak of 23% reached in mid-2004 when default warnings were at their lowest.
With slower appreciation, some distressed homeowners may find it harder to sell their homes for more than they owe their mortgage lenders, DataQuick said.
Still, the first-quarter increase is far below the record set in 1996, when 59,897 default warnings were delivered, according to DataQuick, which has been keeping track since 1992.
Typically, about 5% of homeowners who receive default notices end up losing their homes to foreclosure.
More than 20 million Californians own their home. Last year, 600,000 new and existing homes were sold statewide.