More Californians were delinquent on their mortgages in the second quarter this year than the same period a year ago, but fewer lost their homes from April through June than in the second quarter the previous year, a real estate research firm reported today.
Lenders sent out a total of 124,562 default notices during the second quarter – these notices are the first stage in the foreclosure process and are sent when a borrower misses numerous payments. That was down 8% from the previous quarter’s record 135,431 default notices, and up 2.4% from 121,673 in the second quarter 2008, DataQuick reported.
Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 45,667 during the second quarter. That’s up 5 % from 43,620 for the previous quarter, and down 28% percent from 63,316 for second-quarter 2008. They reached a record 79,511 during last year’s third quarter before dropping following a state law that slowed the foreclosure process and voluntary moratoriums by lenders.
DataQuick President John Walsh said the bogged-down pace of foreclosures may be ending. "There is a perception that the housing market is dragging along bottom, that it probably won’t get much worse, and that the lenders need to get serious about processing the backlog of delinquencies, either with work-outs or foreclosure. We’re hearing that some lenders and servicers are doing just that, hiring more people to do the necessary paperwork. That means the foreclosure numbers will probably shoot back up during the third quarter," Walsh said
Foreclosures that are getting sold right now are mostly 2/28 subprime loans that stopped in 2006 and were fixed for 2 years before adjusting upwards. It takes about 11 months on average to foreclose and sell a property so the stuff that's selling now was 2/28 paper originated in mid 2006. The next wave will be from 5/1 mortgages, also stopped in 2006. These were loans made to people with great credit, but stated income. They will start adjusting in 2011 and unless values return AND lenders begin doing stated income mortgages again, there is no way that these borrowers can avoid foreclosure. With the 11 month foreclosure cycle, we are looking at a dearth of REO in 2012. Hate to be bearish, but reality is what it is.
