Randolph Kinney
Elite Member
- Joined
- Apr 7, 2005
- Professional Status
- Retired Appraiser
- State
- North Carolina
Lenders take notice as defaults are rising
http://www.signonsandiego.com/news/metro/20060515-9999-1n15default.html
Homeowners feel pinch of adjustable-rate loans
By Emmet Pierce and David Washburn
UNION-TRIBUNE STAFF WRITERS
May 15, 2006
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 Information Systems reported.
In contrast, Nicolas Retsinas of Harvard's Center for Joint Housing Studies says the increase in default activity coming during a time of economic growth is a sign that many adjustable-rate mortgages, or ARMs, carry too much risk for borrowers.
The trend toward highly leveraged loans began when middle-wage consumers in escalating housing markets no longer could qualify for fixed, 30-year mortgages, Geisen said. Nearly three-quarters of all home loans made in the county last year were ARMs.
“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.”
http://www.signonsandiego.com/news/metro/20060515-9999-1n15default.html
Homeowners feel pinch of adjustable-rate loans
By Emmet Pierce and David Washburn
UNION-TRIBUNE STAFF WRITERS
May 15, 2006
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 Information Systems reported.
In contrast, Nicolas Retsinas of Harvard's Center for Joint Housing Studies says the increase in default activity coming during a time of economic growth is a sign that many adjustable-rate mortgages, or ARMs, carry too much risk for borrowers.
The trend toward highly leveraged loans began when middle-wage consumers in escalating housing markets no longer could qualify for fixed, 30-year mortgages, Geisen said. Nearly three-quarters of all home loans made in the county last year were ARMs.
“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.”
