The Foreclosure Report

San Diego Defaults Jump 60%

The Union Tribune reports on defaults in San Diego. "A recent spike in default notices may be a sign that some homeowners are struggling to pay the adjustable-rate mortgages that now dominate lending in San Diego County's residential real estate market, analysts warn."

"Notices of default, the first step toward mortgage foreclosure, jumped 60 percent in the San Diego region in the first three months of this year, compared with the first quarter of last year, DataQuick reported. Neighboring Riverside County had a 64 percent jump in default notices over the last year."

"David Berson, chief economist for mortgage-investment giant Fannie Mae. However, Berson is troubled that foreclosure activity is rising during a period of economic growth. 'Normally this is a situation in which housing problems tend to go down, not up,' Berson said. 'If it continues, it could be a sign that borrowers are in financial distress.'"

"Longtime San Diego mortgage broker Ed Smith Jr. Smith has seen too many people who are willing to take financial risks for their slice of the American Dream. 'You have a hardworking family trying to buy home in a market where a starter home costs $500,000 to $550,000,' said Smiths. 'They are all looking for the lowest monthly payment. They don't plan for when the freight comes due on that ticket.'"

"In La Mesa, Erik Weichelt, a real estate agent who specializes in marketing or real estate owned properties acquired through foreclosure, said business is good. 'We have more REOs now than we have in the past three years,' Weichelt said. Until recently, 'there was no need for the foreclosure process; appreciation was so strong. People were able to refinance or sell the property and get a fresh start. Now, because of limited appreciation and some stagnation in the market, that is just not available.'"

posted by Ben Jones @ 2:22 PM