•California Mortgage-Default Notices Increase 19%

Discussion in 'Economics' started by ByLoSellHi, Oct 20, 2009.

  1. http://www.bloomberg.com/apps/news?pid=20601087&sid=a4KiQ2.ooKW8

    Countrywide Mortgages Lead California in Defaults (Update2)
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    By Dan Levy

    Oct. 20 (Bloomberg) --
    Default notices on California home mortgages rose almost 19 percent in the third quarter from a year earlier as job losses and falling property prices deepened the state’s housing recession, MDA DataQuick said.

    Loans originated by Countrywide Financial Corp. accounted for 6.8 percent of the 111,689 default notices recorded by MDA DataQuick. Washington Mutual Inc. originated 4.6 percent of the sour loans and Wells Fargo & Co. almost 4 percent, San Diego- based MDA DataQuick said today in a statement.

    “There’s a batch of truly nasty loans that were made in mid-2006,” John Walsh, MDA DataQuick’s president, said in the statement. “It’s taking a long time to process them.”

    The median price of a California home dropped to $251,000 in September, down 11 percent from a year earlier, MDA DataQuick said last week. California’s unemployment rate was 12.2 percent in August compared with 7.6 percent a year earlier. Nationally, unemployment rose to 9.8 percent in September.

    Some California homes in the DataQuick survey received more than one default notice in the quarter.

    12% Defaults

    The default rate on loans originated in the second half of 2006 ranged from 1.7 percent for Bank of America to 12 percent for World Savings, now part of Wells Fargo, MDA DataQuick said.

    Smaller subprime lenders, most of which bundled and sold their loans and are now out of business, had higher defaults rates for loans originated in the second half of 2006, MDA DataQuick said.

    About 74 percent of mortgages originated by ResMAE were connected to homes in default, MDA DataQuick said. The rate was 70 percent for Ownit Mortgage, 61 percent for BNC Mortgage, 60 percent for Argent Mortgage and 59 percent for First Franklin.

    “Many, if not most” of the mortgages originated in 2006 are currently owned or serviced by institutions other than those that made the loans, MDA DataQuick said.

    A total of 108,372 homes got a default notice last quarter, with some borrowers in default on multiple loans, MDA DataQuick said. Notices are recorded at county recorders’ offices and represent the first step in foreclosure. Homeowners can stop the foreclosure process by catching up on payments, refinancing or selling the property.

    Lenders may be slowing property seizures to avoid “flooding the market with cheap foreclosures in this economic environment,” Walsh said.

    Foreclosure Tally

    Foreclosures totaled 50,013 during the quarter, up 9.5 percent from 45,667 in the prior quarter, and down 37 percent from a record 79,511 in the third quarter of 2008.

    MDA DataQuick is a unit of Richmond, British Columbia-based MacDonald, Dettwiler & Associates Ltd. The research company compiles surveys using county records and supplies real-estate information to public agencies, lenders and title companies.

    JPMorgan Chase & Co. now owns the assets of Washington Mutual. Bank of America Corp. acquired Countrywide.

    To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net
    Last Updated: October 20, 2009 14:35 EDT
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