Mortgage defaults in California soared in the second quarter to the highest level in 10 years, the result of weak home sales and sagging home prices in the nation’s largest state, a real estate research firm said Tuesday.
A total of 53,943 default notices were sent to homeowners between April and June, two and a half times the 20,909 seen in the second quarter of 2006, according to DataQuick Information Systems.
The notices serve as an early indicator of possible foreclosures — which also are soaring. In recent months, the mortgage industry has been rocked by defaults and foreclosures, primarily driven by borrowers with subprime loans and adjustable rate mortgages.
The latest default figures represent a 15.4 percent increase since the first quarter, when 46,760 defaults notices were sent out statewide, the firm said.
The last time more default notices were recorded in the state was between October and December of 1996, when the figure reached 54,045. Defaults had peaked in the first quarter of 1996 at 61,541.
Many of the mortgage loans that went into default in the most recent quarter were taken out between July 2005 and August 2006, when real estate was already showing signs of a slowdown, DataQuick said. The median sale price of the homes was $445,500.
The number of foreclosed homes in California was 17,408, compared with 1,936 in the year-ago period.
Mortgage defaults have been on the rise statewide since fall 2005, coinciding with a slowdown in sales and lagging home appreciation. When home appreciation slows, it makes it harder for homeowners who fall behind on payments to sell their homes and clear the debt.