California foreclosure activity hits record in third quarter
October 26, 2007
LOS ANGELES (AP) ” A real estate research firm on Friday reported a record number of California foreclosure proceedings in the third quarter, a result of the subprime market collapse and homeowners overreaching during the state’s housing boom.
A total of 72,571 notices of default were filed during the July through September period, up 166.6 percent from the same time last year and up 34.5 percent from the previous quarter, DataQuick Information Systems said.
Last quarter’s default level broke the previous record of 61,541 set in the first quarter of 1996.
“We know now, in emerging detail, that a lot of these loans shouldn’t have been made,” DataQuick president Marshall Prentice said. “The issue is whether the real estate market and the economy will digest these over the next year or two, or if housing market distress will bring the economy to its knees.”
Most of the loans that went into default last quarter were written between July 2005 and September 2006 in the fastest-growing parts of the state east of Los Angeles.
The median age of a defaulted loan was 18 months.
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Many homes are financed with multiple loans. In the housing peak, many borrowers even financed their down payments.
As a result, the 72,571 default notices delivered in the third quarter were recorded on 68,746 different residences.
Half of the state’s defaults were concentrated into two of the state’s hottest real estate market: the areas east of Los Angeles in Riverside and San Bernardino counties and the state’s central valley, north of Los Angeles, DataQuick said.
Home prices in the 293 zip codes with the largest foreclosure activity are now 11.7 percent off their peak. Home sales statewide in September sank to their lowest level in two decades as mortgages became harder to get.
September sales were down 45.2 percent from September of 2006 and 26.8 percent from August, DataQuick said.