No escape: Foreclosure more likely than ever for defaulting homeowners
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The efforts of the Hope Now coalition (pictured) are not translating into results in California: New statistics show that homeowners who default on their mortgages are more likely than ever to lose their homes to foreclosure.
Every three months, DataQuick measures the ‘escape rate’ -- the percentage of the homeowners in default who manage to emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. As defaults mount, the ‘escape rate’ (my phrase, not DQ’s) has been sinking like a stone for two years:
Quarter # of defaults in Cal. ‘escape rate’
2Q 06 20,909 88%
3Q 06 27,218 80.9%
4Q 06 37,994 71%
1Q 07 46,760 52%
2Q 07 53,943 54.6%
3Q 07 72,571 45.9%
4Q 07 81,550 41%
1Q 08 113,809 32%
2Q 08 121,341 22%
Source: DataQuick Information Systems
Analysis: In fairness to the efforts of lenders to work out problem loans, workouts become more difficult when prices are falling rapidly, so some decline in the ‘escape rate’ is to be expected as prices weaken. But this is a dramatic decline.
Hat tip: Cal, in the comment section.
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