August 4, 2006
More California homeowners are having difficulty making their mortgage payments, according to a report by DataQuick Information Systems, which tracks real estate data in the state. In the second quarter, banks and mortgage companies sent warning notices to more than 20,000 homeowners, telling them they were in danger of foreclosure.
DataQuick says that's an increase of 67 percent from the second quarter last year, and the biggest one-year jump on record. One company analyst calls it a key measure of financial distress.
Many homeowners may be behind in their payments because of changes in interest rates and a slowing real estate market. Those who barely quailed for their home by taking a low adjustable rate mortgage may be faced with sharply higher monthly payments as their rate has been adjusted upward. A slowing market with increased inventory means they will have a harder time selling their home to avoid foreclosure.
A notice of default does not necessarily mean a homeowner will lose their house. In fact, default notices in California are still below the quarterly average of 32,000. But DataQuick notes the second-quarter total was 1,901, a whopping 215% jump over the 604 recorded in the same period last year.
