According to the Los Angeles Times, default notices have more than doubled in the July-September period of this year vs. 2005, for a total of more than 26,000 notices being mailed in the state. Almost as worringly, the rate of those who entered default and actually lost their homes tripled, from 6% to 19%. On the positive side, defaults have not risen to 1996 levels, when nearly 60,000 homes entered default in one quarter. Illustratory vignette:
"Just Wednesday morning, Zhang dealt with a Lancaster resident who had taken out a $310,000 adjustable-rate mortgage with a starter interest rate of 5.4% and a monthly payment of $1,050. In July, the interest rate climbed to 8.5% and the monthly payment jumped to $2,306. A year-end adjustment will send the monthly payment to $2,744."
Favorite quotation from an agent:
"We were putting buyers in homes with loans they could not afford to sustain over the long haul," said Bob Casagrand, a San Diego real estate agent. "If you're a marginal buyer with an adjustable mortgage, you're rolling the dice on the future."
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