L.A. County mortgage delinqency rate remains at about 10%

    About 1 in 10 Los Angeles County mortgage holders was delinquent by 90 days or more in July, according to First American CoreLogic. That's basically the same level as June.

   But the 9.8% Los Angeles County delinquency rate was almost double the 5% delinquency rate of July last year. The rate of L.A. County foreclosures, 3.7% in July, was also about double last July's rate, suggesting lenders may not be delaying foreclosures as much as they had earlier in the year. More data from First American are in the table below.

-- Peter Y. Hong

Location	90+ Day Delinquency Rate July 2009	90+ Day Delinquency Rate July 2008	Change in 90+ Day Delinquency Rate	Foreclosure Rate July 2009	Foreclosure Rate July 2008	Change in Foreclosure Rate	REO Rate July 2009	REO Rate July 2008	Percentage Point Change in REO Rate
California	9.60%	5.70%	3.90%	3.60%	2.20%	1.40%	0.90%	1.70%	-0.80%
Los Angeles-Long Beach-Glendale, CA	9.80%	5.00%	4.80%	3.70%	1.90%	1.70%	0.90%	1.30%	-0.40%
US	6.86%	4.01%	2.85%	2.79%	1.59%	1.20%	0.54%	0.78%	-0.24%

Mortgage delinquencies hit record high as more prime loans fall behind

Mortgage delinquencies in the second quarter hit the highest level since 1972, the Mortgage Bankers Assn. reports today. The home mortgage delinquency rate climbed to 9.24%, up slightly from the first quarter, which had been the previous record high. 

Prime fixed-rate mortgages made up one-third of delinquencies, up from one-fifth a year earlier. The bankers group said rising delinquencies on prime mortgages are the result of rising unemployment.

The group defines delinquency as loans at least one payment past due. Lenders typically do not start foreclosure proceedings until multiple payments are missed.

The full release is here.     

California's 9.4% delinquency rate was slightly higher than the nation's.   

This week, First American CoreLogic reported 32% of mortgages in the nation were underwater, or greater than the value of the homes. In the Los Angeles area, which includes Orange County, 35% of homes had negative equity, First American said. 

Barring an effective foreclosure remedy, which has yet to surface, these latest measures of distress suggest a steady stream of foreclosures will continue for many months.

-- Peter Y. Hong

Activist group challenges mortgage lender in front of L.A. family's home

More than two dozen members of the Assn. of Community Organizations for Reform Now, better known as ACORN, gathered outside the home of a Los Angeles truck driver and his family this afternoon in an effort to keep the home from being sold.

The small rally was a part of the activist group's "Home Wreckers" campaign targeting lenders that aren't adjusting home loans under the Obama administration's $75-billion Making Home Affordable plan and other home-saving efforts from the federal government, said Anthony Panarese, an ACORN organizer.

The demonstration took place in front of the foreclosed residence of Jose Rodriguez, who lives in the home with his wife and three sons, in Huntington Park shortly after 2 p.m.

Rodriguez has unsuccessfully tried over the last two years to modify his mortgage with lender Litton Loan Servicing, owned by Goldman Sachs & Co., Panarese said. Calls to Litton, based in Houston, requesting comment weren't returned.

The ACORN campaign also targets other lenders,including American Home Mortgage Investment Corp., OneWest Bank Group, formerly known as IndyMac, and HomEq Servicing, owned by Barclays.

In July, the U.S. Treasury Department criticized lenders, including banks JPMorgan Chase, Wells Fargo and Bank of America, for not helping enough homeowners on their mortgages.

The Obama administration asked lenders to modify 500,000 mortgages by Nov. 1 using the government's Making Home Affordable plan, which subsidizes lender's costs when lowering loan payments for those in need.

About two months ago, Rodriguez and Litton agreed to a loan modification, but then the lender backed out of the agreement and decided to foreclose on the home, Panarese said.

The company tried to sell Rodriguez's home in a foreclosure auction July 15, but it didn't sell, so the ownership of the property reverted to Litton, he said.

Rodriguez, whose income has taken a hit in the recession, bought the home in 1994 with an adjustable rate mortgage from Litton, Panarese said.

-- Nathan Olivarez-Giles

Foreclosure backlog keeps building

July stats from ForeclosureRadar show that the backlog of California homes in default, but not yet repossessed, keeps growing.

At some point, many of these properties will be repossessed and put back on the market. Some may be kept by the current owners through loan modifications, but that hasn't happened much so far. Until then, they remain clogging the system as "shadow inventory," most likely to be foreclosed and sold again. 

Key California data points:    

-- Default notices, which are sent when a borrower has missed several payments, were up 12% in July compared with a year earlier. Notices of default are the first stage of foreclosure.    

-- Auction notices, in which an auction date is set, were about even with last year's level. This is the second step in foreclosure. After a default notice is sent, and even after an auction date is set, the borrower and lender can reach a loan modification agreement or sell the property to get out of foreclosure.

-- Repossessions were down 40% from a year earlier, even though default notices were up and auction notices were flat. Lenders are delaying the final step in foreclosure. This is what's creating the growing backlog of distressed properties.

-- Foreclosures scheduled for sale -- these are the properties awaiting auction -- increased 93% from a year earlier.

The jump in foreclosures scheduled for sale reflects the widespread practice of lenders stalling the final sale of distressed properties. There are more than 124,000 of these properties in California awaiting auction.

“More homeowners are now sitting at the brink of foreclosure, just days away from the next scheduled auction date, then ever before, yet we simply aren’t seeing the wave of foreclosures many predicted," said ForeclosureRadar CEO Sean O'Toole.

ForeclosureRadar is an online seller of California default data.

More repossessions are coming, however, due to the degree to which so many in California are underwater on their mortgages. The average California home in foreclosure has a loan balance of $425,000 but an estimated value of $237,000, ForeclosureRadar says.    

-- Peter Y. Hong

Loan mods still low

   Banks have been slow to modify mortgages under the latest federal foreclosure prevention effort. Today's Times has an analysis of the latest Treasury report card.
    The Treasury site has a scorecard showing the performance of various banks here.

Following up on L.A. foreclosure properties

Back in March L.A. Land looked at some Los Angeles foreclosures for sale. Thought we might follow up to see what they went for:

5605 Shenandoah Ave., Los Angeles 90056
Size: This 3,565-square-foot home in the Ladera Heights area has four bedrooms and 3½ bathrooms. The 1959 two-story house sits on a roughly 9,600-square-foot lot.
Agent description: The home has granite kitchen countertops, ceramic and wood floors, a wet bar and an aluminum steel roof.
Listed for: $789,000

Sold June 9 for $705,000.

Another foreclosure listed then was:

4138 Bledsoe Ave., Los Angeles 90066
Size: The 1,297-square-foot home has three bedrooms and two bathrooms. The 1953 single-story home is on a lot of about 4,240 square feet.
Agent description: The traditional home on a tree-lined street in the Mar Vista area features hardwood floors, a private patio and a large, gated front yard with a pond.
Listed for: $489,900

Still for sale. The price was reduced to $440,000 July 20.

Also:

3952 Walgrove Ave., Los Angeles 90066
Size: The single-story home in the Palms/Mar Vista neighborhood is about 900 square feet. The home, built in 1941, is on a roughly 5,980-square-foot lot and has two bedrooms and one bathroom.
Agent description: The redone house has bamboo floors and travertine countertops.
Listed for: $679,900

Sold July 23 for $639,000.

So did the buyers get some deals buying foreclosures, or are those prices still too high?

--Lauren Beale

Thoughts? Comments?

Photo:  The 90056 ZIP Code for 5605 Shenandoah Ave., top, has seen 26 sales since the first of the year at a median price of $650,000, according to MDA DataQuick. That's a price drop of 22.6% from the median for the first half of 2008. Credit: Nelson Shelton & Associates

Photo:  The 90066 ZIP Code for 4138 Bledsoe Ave., middle, and 3952 Walgrove Ave., bottom, has seen 114 sales since the first of the year at a median price of $675,000, according to MDA DataQuick. That's a price drop of 14.4% from the median for the first half of 2008. Credit: Maria Hsin

One in 10 California, L.A. homeowners in default

New data from First American CoreLogic shows mortgage delinquencies climbing in June, with both California and Los Angeles posting default rates of about 10%. Yes, a staggering one out of 10 mortgage holders in Los Angeles County and California missed enough mortgage payments to receive a notice of default.

Default notices are the first stage in the foreclosure process. In June, Los Angeles County defaults rose to 9.9% of mortgage holders, from 9.5% in May. That's nearly double the 5.2% Los Angeles default level in June 2008.

Statewide, 9.5% of California mortgage holders were in default, up from 9.2% in May and 5.8% in June 2008.

Actual repossessions -- the final stage in foreclosure -- are not keeping pace with defaults. The Los Angeles repossession rate in June was 0.9%, down from 1.2% a year ago. California's repo rate was 1%, down from 1.6% a year ago.

Lenders are clearly dragging their feet on foreclosures. Some contend they are trying to put foreclosed homes on the market at an orderly pace, to keep prices from collapsing. Lenders say they were simply complying with government-imposed moratoriums and were waiting to see what other foreclosure prevention measures would be coming from Washington.

 Lenders may also be trying to complete more loan modifications to avoid more invasive government efforts such as passage of a law allowing bankruptcy judges to order reductions in loan principal. So-called "cramdown" legislation has been supported by the Obama administration but was taken off the table earlier this year. Prominent Democrats, including Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee, have said that they would push for cramdowns if loan modifications don't go up.

-- Peter Y. Hong

Foreclosure myths?

There's much speculation now about why foreclosures are down even as defaults are up. Some wonder whether banks are deliberately slowing foreclosures to control the supply of REOs (real estate owned homes) for sale. 

Sorry for the delay, but Carlsbad, Calif., broker Jim Klinge, aka "Jim the Realtor," posted Wednesday his opinion that there's not much to those theories.    

Klinge's take? Basically:

1) Foreclosure delays may actually be caused by the borrowers and their Realtors attempting short sales and other actions that postpone the repossession.

2) Another huge wave of foreclosures won't overwhelm demand. Klinge says in his area "if 1,000 McMansions hit the market and there isn't demand, price will fix it." That is, prices will fall to the point they create demand, if that's necessary.

-- Peter Y. Hong

Foreclosure hot spots

Here are some locally specific statistics from MDA DataQuick's quarterly foreclosure report for California.

Top five ZIP Codes in number of homes repossessed by lenders, per capita, second quarter 2009:

1. Tracy 95391 (148 Q2 foreclosures, 71 per 1,000 homes)
2. San Jacinto 92582 (220 Q2 foreclosures, 56 per 1,000 homes)
3. Lake Elsinore 92532 (244 Q2 foreclosures, 52 per 1,000 homes)
4. Perris 92571 (504 Q2 foreclosures, 47 per 1,000 homes)
5.Merced 95341 (477 Q2 foreclosures, 47 per 1,000 homes)

Some upscale communities with big annual jumps in foreclosures (in no particular order):

--South Pasadena 91030 (24 Q2 foreclosures, 200% over same quarter last year)
--La Jolla 92037 (103 Q2 foreclosures, 115% over same quarter last year)
--Manhattan Beach 90266 (35 Q2 foreclosures, 192% over same quarter last year)
--Calabasas 91302 (94 Q2 foreclosures, 170% over same quarter last year)
--Malibu 90265 (54 Q2 foreclosures, 146% over same quarter last year)
--Beverly Hills 90210 (61 Q2 foreclosures, 110% over same quarter last year)

Foreclosures are generally less than 1% of all homes in those upscale ZIPs, but they still skew prices. That's because a much smaller percentage of total homes is typically on the market in those areas, so a few dozen foreclosed is a significant share of homes for sale.

San Marino 91108 had only three foreclosures in Q2, the same as Q2 2008.

-- Peter Y. Hong

Tips to avoid loan modification scams

The Federal Trade Commission has teamed with local and state authorities in a nationwide crackdown on loan adjustment scams, as reported in the Business section of The Times.

But one of the biggest challenges the FTC and its allies are up against is reaching homeowners looking to stave off foreclosure before the scammers reach them and dupe them, promising mortgage modification services that they never deliver.

The FTC produced a video on how to avoid scams as part of its inter-agency crackdown, dubbed "Operation Loan Lies," which can be watched and downloaded at www.ftc.gov/YourHome, or below.



The FTC's video, "Real People, Real Stories," is also available in Spanish, which can also be seen below.



For those seeking to lower their monthly home loan payments, here are some tips on avoiding scams. The suggestions come from the FTC and the office of California Atty. Gen. Jerry Brown:

• The first thing anyone seeking to modify an existing loan should do is call his lender.

• Lenders want to hear from homeowners and will probably be more willing to work directly with them than with a foreclosure consultant. Do not ignore letters from your lender. Many lenders are willing to work with homeowners who are behind on their payments.

• Contact housing counselors approved by the U.S. Department of Housing and Urban Development, who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at (800) 569-4287 or www.hud.gov.

• It is illegal for foreclosure consultants to demand money before they give you a written contract  and before they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan.

• However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the California Department of Real Estate for review.

• Do not transfer title or sell your house to a "foreclosure rescuer." Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later.

• Fraudulent foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. Beware -- this is a common scheme so-called rescuers use to evict homeowners and steal all or most of the home's equity.

• Do not pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

• Do not sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the "rescuer" who is actually a scammer.

Homeowners who think they have been ripped off can file a complaint with the California Department of Real Estate through their website here. The department also offers tips on how to avoid getting scammed and what to do if you think you've been scammed here.

Complaints can also be made directly to the FTC by phone at (877) 382-4357, the FTC's Headquarters or Financial Services Division in Washington, D.C., at (202) 326-2222. The FTC also has regional offices; in San Francisco at 901 Market St. and in Los Angeles at 10877 Wilshire Blvd.

HUD can set up homeowners with personalized guidance from housing counseling agencies they've certified at (888) 995-4673. More information on how to find free certified counseling services is available at HUD's guidance website at www.hopenow.com or the Obama Administration's website loan modification website, www.makinghomeaffordable.gov.

-- Nathan Olivarez-Giles