Economy

California's mortgage defaults at three-year low

Even as the economic recovery sputters, the home-mortgage crisis that helped trigger the recession appears to be easing.

Mortgage defaults in California have fallen to their lowest level in three years, market researcher MDA DataQuick said Wednesday. In the Sacramento region, defaults — the first formal step toward foreclosure — have dropped 38 percent in the past year.

Some of the drop-off may reflect an increase in short sales, in which troubled homeowners sidestep the foreclosure process but still lose their homes. But experts said it's also a sign of a housing market that's genuinely improving. A tightening of lending standards also means fewer buyers are taking out loans they can't repay.

"The bad loans have kind of worked their way through," said Warren Adams of Security Pacific Real Estate in Fair Oaks. He said mortgages issued in, say, 2008, are far less likely to go into default than those made in 2006.

Statewide, DataQuick said lenders issued 70,051 default notices in the second quarter, down 44 percent from a year earlier. It was the lowest number since almost 54,000 were issued three years ago.

In the Sacramento region, stretching from Amador to Nevada counties, defaults fell to 6,620. That compared with 10,682 a year ago.

"The market has stabilized in most areas," said DataQuick analyst Andrew LePage. "We're moving further and further beyond the initial problem, which was the subprime loans."

To read the complete article, visit www.sacbee.com.

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