September 13, 2007
San Diego’s distressed-property market grew substantially larger last month as mortgage defaults topped the 2,000 mark for the first time and foreclosures hit a record that was more than six times what they were a year ago.
DataQuick Information Systems said notices of defaults, the first step leading to foreclosure, numbered 2,071 in August. That was up from 1,573 in July and more than twice the number recorded last year, 794. The previous record was 1,596 in June. DataQuick’s figures go back to 1988.
Trust-deed sales, generally involving properties foreclosed on by lenders but not necessarily sold to a new buyer, totaled 833. That was up from 641 in July, 6.2 times higher than the 134 in August 2006. The previous record of 657 was in June.
The rise in foreclosure activity in San Diego comes amid a national crisis in mortgage lending focused on the subprime sector that has sent a record number of homes into the foreclosure process.
Earlier this month, the Mortgage Bankers Association reported in its quarterly National Delinquency Survey that 5.1 percent of 44 million loans surveyed were past due. That put the national rate of loans entering the foreclosure process last quarter at the highest level in the history of the survey, which dates to 1953.
Sunday in Home: The foreclosure problem does not play out equally across the United States.
DataQuick said foreclosure resales throughout Southern California accounted for 8.8 percent of all sales activity in August, up from 8.3 percent from July and 2.2 percent in August 2006.
However, the company said the generally lower-priced foreclosures do not yet seem to be having a significant marketwide effect on prices, except in more heavily impacted Riverside and San Bernardino counties and high-desert markets.
“Other indicators of market distress continue to move in different directions,” the company said in its monthly report on prices and sales. “Financing with adjustable-rate mortgages is flat (and) financing with multiple mortgages has declined significantly.”
Down payments remain at a stable level and the low rate of quick resales, known as “flipping,” and investor purchasing is unchanged.
Many buyers in high-priced areas such as San Diego made widespread use of jumbo loans – those exceeding the $417,000 conforming loan limit set for major secondary mortgage market investors Fannie Mae and Freddie Mac. But with tightening credit and underwriting standards, those are slightly less prevalent, DataQuick found.
For Southern California, the first half of August saw 43.4 percent of home loans involving jumbos, while in the second half usage was 39.7 percent.
In San Diego County, jumbos accounted for 39.1 percent of all loans in July, 38.7 percent in the first half of August and 36.1 percent in the second half of the month.
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