From todays WSJ. Check out the numbers in CA. Good thing our politicians want a bail-out for all those speculators!
August 30, 2007, 12:32 pm
Investment Homes Make Up Large Proportion of Defaults
housingMortgages for investment properties constitute a major chunk of defaults in four states with the fastest-rising rates of seriously delinquent loans, according to data released today by the Mortgage Bankers Association.
Mortgages on nonowner occupied properties in Nevada accounted for 32% of prime mortgage defaults as of June 30 as well as for 24% of subprime loan defaults, the MBA said. In the rest of the country, nonowner occupied homes accounted for 13% of prime defaults and 11% of subprime defaults.
“Defaults are on the rise in most parts of the country, but it should be recognized that it is not always the case of a homeowner losing his or her home,” said Doug Duncan, the MBA’s chief economist. Rather, it’s “often the case of an investor gambling on a continued increase in home values and losing that gamble,” Duncan said in a statement. Defaulted mortgages are those that are at least 90 days past due or in foreclosure.
In Florida, defaults for nonowner occupied property mortgages made up 25% of prime loans and 14% of subprime loans. In Arizona, defaults for nonowner occupied properties made up 26% of prime loans and 18% of subprime loans. And in California, nonowner occupied property defaults made up 21% of prime loans and 15% of subprime loans.
California, Nevada, Arizona and Florida were among the states with the fastest home-price appreciation over the last five years, Duncan noted.
“This rapid price appreciation attracted both speculators and home builders, a volatile combination that lead to an oversupply of homes that was beyond the capacity of the local populations to support,” he said. “When this oversupply became apparent and prices began to fall, many of these investors simply walked away from their mortgages.” –Ruth Mantell
So 79% of CA prime loans in default are “owner-occupied” and 85% of CA subprime loans in default are “owner-occupied”. At least according to the article.
I wonder what % of “owner-occupied” loans in default, prime and subprime, are loans that were obtained under the premise of being “owner-occupied” but were in fact never “owner-occupied”.
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