More US Homeowners Going Into Default

Created by : Francis Goodwin View profile

A housing market slowdown combined with rising payments on adjustable-rate loans is leading to a sharp hike in notices from lenders.

By David Streitfeld and Martin Zimmerman -- Los Angeles Times

Oct, 19, 2006 -- The number of Californians who are significantly behind on their mortgage payments and at risk of losing their homes to foreclosure more than doubled in the three months ended Sept. 30, providing the latest evidence of trouble in the housing market, figures released Wednesday show.

Lenders sent out 26,705 default notices -- the first step toward a foreclosure -- during the July-to-September period, up from 12,606 during the same quarter in 2005, according to DataQuick Information Systems.

Defaults are still well below their peak level of 59,897, which came in the first three months of 1996, as the state's last housing slowdown was ending. But the report shows that the slumping housing market is taking a toll on more homeowners -- especially those with mortgages that offer low initial payments at the cost of higher bills down the road.

"We were putting buyers in homes with loans they could not afford to sustain over the long haul," said Bob Casagrand, a San Diego real estate agent. "If you're a marginal buyer with an adjustable mortgage, you're rolling the dice on the future."