California Home Defaults Slow Down

by Simon Lindsay on States

For the second quarter of the year, the number of home defaults in California increased but it was less dramatic than what most experts expected. Receiving a default notice is actually the first step in the foreclosure process.

Although California home defaults have somehow slowed down, many experts are skeptical about it being a sign that the foreclosure problem in the state is letting up. for them it is still early to tell.

A possible explanation for this is that lenders are overwhelmed with the paperwork and are unable to complete the necessary documents to file the default notices. Another reason could be is that there is an increasing number of lenders who are working with the distressed borrowers to restructure their mortgages and avoid foreclosure.

Across the state, homeowners are struggling with mortgage payments as a result of predatory lending practices which prevailed during the last housing boon in 2005. most of these homeowners managed to get approved for loans they were not qualified for. To make matters worse, the loan terms were actually disadvantageous and only set up these borrowers to fail.

Despite the slowing growth in home defaults, the total number of homes that entered some stage of foreclosure is still high. At the end of the first half of the year, California has the second highest foreclosure rate in the nation, with one filing for every 192 homes. Compared to 2007, foreclosure rate increased by 76.97 percent.

Of course, the large inventory of foreclosure homes in the market has opened up a wealth of investment opportunities for first time buyers and seasoned real estate investors. With home prices declining in most counties, enjoying considerable savings is not impossible with these foreclosure homes. The key is making sure that the buyers do their homework before closing any deal.