Nearly a 20% decline in County default notices was reported by local company MDA DataQuick. Just over 3,300 notices of default were sent throughout July. In August, just over 2,650 were sent. This number reflects a drop of nearly 7%, and is the lowest since November of 2008. The bad news is that as the decline in default notices are reflected statewide, the overall mortgage delinquency rate continues to increase.
Home owners become delinquent when the miss payments for 2-3 months. Notices of default are not typically mailed until the homeowner is 6 months behind. At that point, foreclosure typically occurs.
It has been pointed out that even though the number of delinquent home owners is on the rise, the decline of foreclosures could mean that an increasing number of lenders are working with distressed home owners by restructuring their mortgages or arranging for short sales of the properties.
Loan modifications have not yet proven to be successful statistics show that nearly 50% of all loan modifications fail because homeowners continue to default on the restructured payments. On a positive note, an increase in successful modifications can attribute greatly to a faster market recovery than hoped.
A real estate professor at the University of San Diego, Norm Miller stresses that the unemployment rate should be watched very closely through all this concern. He states that when the unemployment rate bottoms out and shows improvement, that should indeed correlate with the decline in the default rate. The unemployment rate through San Diego remained unchanged throughout the month of August while the national rate showed an increase.
It is widely agreed by economists that stabilized employment figures can only attribute to a more stable housing market. People need to get into stable jobs so as to be able to minimize the reason for becoming delinquent on mortgage payments.
Here is a breakdown of foreclosure numbers from around the County:
Eastern Escondido: Down 72.3% from July
Northern Oceanside: Down 70.7% from July
Eastlake-Otay Ranch in Chula Vista: Down 60% from July
It has been pointed out that these declines could be skewed by the possible fact that banks are just currently "clogged" with so many defaults and foreclosures which are pending in the pipeline.
On a final positive note, those first-time buyers out there who are able to purchase a foreclosed or short-sale property will continue to find this a great time to buy in many areas with almost a guaranteed return in investment.
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