Friday, June 6, 2008

California and foreclosure

The Mortgage Banker Association released their National Delinquency Survey today. It is showing record activity concentrated in the bubble states and prime and subprime ARMs as represented in this WSJ graph:

The MBA breaks down prime versus subprime by FICO score instead of by loan type so you get a lot of what I would term "subprime products" (stated income, hybrid ARMs, option ARMS) in the Prime ARM category.

The following quote from MBA research chief to the Money & Co. blog on LA Times caught my eye:
"But Jay Brinkmann, research chief at the mortgage bankers' group, says the problem in California is that delinquent loans have less of a chance of being cured than in other parts of the country because of the severity of the home price declines here. In other words, delinquencies are more likely to turn into foreclosures in the Golden State."

Dataquick mentions this phenomenon in their quarterly foreclosure reports as well. The number of homes entering the first steps of the foreclosure process and able to prevent foreclosure has been steadily decreasing. Here is the how much this statistic has deteriorated over the past few years:

As the homes get underwater it becomes less likely they can be saved by alternate means.

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