Bloomberg News

California Mortgage Defaults Tumble 19% to Lowest in Four Years

July 19, 2011

July 19 (Bloomberg) -- Home-mortgage defaults in California fell 19 percent in the second quarter from a year earlier to the lowest in four years as lenders changed foreclosure policies and price declines slowed, according to DataQuick.

A total of 56,633 default notices were recorded statewide in the three months through June, down 17 percent from the first quarter and the lowest number since the second quarter of 2007, the San Diego-based data company said today in a statement.

The drop mirrors a deceleration of the slide in California home values, DataQuick said. Defaults peaked at 135,431 in the first quarter of 2009, when the statewide median price fell almost 40 percent.

“Homeowner distress spreads fastest when home price declines are steepest,” John Walsh, DataQuick’s president, said in the statement. “It now appears likely that, barring some new economic shock, the worst of the price declines are behind us.”

The median price of a California home was $250,000 in the three months through June, down 7.4 percent from a year earlier.

Most loans going into default in the second quarter originated in 2005 to 2007, a period that has shown the worst loan performance for more than two years, according to the data seller. JPMorgan Chase & Co. had the most loans in foreclosure at 9,422, followed by Wells Fargo & Co. at 8,228 and Bank of America Corp. at 7,601, DataQuick said.

Mortgage lenders in the U.S. have changed their foreclosure policies in response to investigations by federal regulators and state attorneys general into bank documentation errors.

--Editors: Christine Maurus, Daniel Taub

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To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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