Mortgage Default Rate Skyrocket in California

Homeowners in California are hard pressed for relieve from the Mortgage Crisis in the United States. The default rate is affecting 1 in every 10 Californians with a home mortgage and its spreading to the Commercial Real Estate Market at an alarming rate.

First American CoreLogic reports the percentage of homeowners who are in the first stages of foreclosure due to and average of three missed payments rocketed in June to 9.5% statewide and 9.9% in Los Angeles County alone.

Mortgage analysts are warning that it isn’t over yet and that Californians can expect to see the number of foreclosures in the up coming quarters to rise. Mainly due to the current recessions result in job losses and the controlled freezes on foreclosures by lenders and government moratoriums have expired.

The current declining housing market is giving every Californian that owes a home an one two knock out pouch as most homeowners are upside down in terms of loan to value on their homes. A good example of this is when the loan amount owed on a mortgage is around $500,000 but the market in its present state can only value the home around $425,000.

Homeowners whom want to sell to keep form going into foreclosure find themselves in a tar pit of issues.  The loan is usually more than the present market value and the homeowner losses on both fronts. They can not make the payment but they can not sell the home either.

Lenders that do business in California report an average of sixty percent of the homeowners that are delinquent on their payments eventually fall into foreclosure.  The vast numbers of these loans were bought under the “no money down” or “Stated” product that lenders provided.  Lenders are trying to off set these numbers by increasing the volume of “short sale loans” and “loan modifications” they process.

The Commercial Market delinquency is approximately 14 loans out of every 6,497 statewide, however most agree that more are on the way. Commercial interest rates are low for the most part and allowing Commercial borrowers to remain current on their loans. However, many commercial properties are already upside down so as soon as rates begin to rise for these commercial loans, the Commercial Market is going to see an increase in “restructured loans” because Commercial Lenders in actuality don’t want to handle properties they would have difficulty selling.