California Defaults, Bank Foreclosures for Sale to Rise

by Donald Hanz on States

Industry analysts projected the rise in the number of home loans that are two months delayed in payments or are in some stage of foreclosure process before the end of 2009. They expected mortgage delinquency rate in the state to jump to over 14 percent.

And as projections for unemployment and mortgage delinquency rates are going up in the coming months, so is bank foreclosures for sale.

Industry analysts said that many homeowners who have lost their jobs are struggling to pay their monthly mortgages and are nearing the end of their coffer. And if help would not come along their way soon, they would end up losing their properties to foreclosures.

But analysts are open to the possibility that the trend would be reversed by the middle of 2010. However, before recovery could happen, lenders need to wipe out the pile of troubled loans that are clogging their systems.

As of June, the rate of residential mortgage loans that were delinquent for two months reached 9.7 percent. These figures are projected to rise to over 14 percent by the end of 2009.

Some counties in the region that are projected to experience a rise in mortgage delinquency rate from 10.7 percent to 14 percent include Orange, Ventura, Los Angeles, San Bernardino and Riverside.

Industry analyst said that the overall economic situation in California is worse than the national economic condition. The state’s unemployment rate rose by 11.9 percent last month compared with the national average rate of 9.4 percent. Furthermore, home prices and values in California dropped so low that many homeowners own more on their mortgages than the market value of their properties.

In San Bernardino County, 14.9 percent of home loans were delinquent for two months while Riverside County’s mortgage delinquency rate was 16.5 percent in June.

In the first three months of this year, mortgage delinquency rate in Riverside County was 2.6 percent and 2.3 percent in San Bernardino County.

According to industry analysts, the normal mortgage delinquency rate for any given state is 1.6 percent to 2 percent. They added that at the rate it is going, California will struggle in the remaining months of this year.

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