San Diego Foreclosures on the Rise, Sign of Larger Trends

Posted in Foreclosures, August 31st, 2006 |

A recent increase in the number of default notices filed in the San Diego area 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.

While the spike doesn’t threaten most homeowners, many of whom have little or no mortgage debt, default activity has captured the attention of economists and researchers who view the San Diego region as a smaller example of national housing trends. Those at greatest risk of default are recent buyers who used adjustable-rate mortgage products to buy properties that otherwise would have been beyond their financial means.

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.

The 1,533 notices issued during the first quarter of 2006 are below the quarterly average of 2,149 over the past 14 years and account for only a fraction of the region’s homes. Typically, about 5 percent of those who receive default notices end up losing their dwellings.

Millions of households across the country are at risk of