OAKLAND—Dec. 5, 2008—Nearly 11 percent of all mortgage loans in California were past due or in foreclosure at the end of September according to new data released this morning from the Mortgage Bankers Association (MBA).
The data, which show that nationally one in 10 homes were delinquent; 1 in 20 were seriously delinquent and 1 in 33 were in foreclosure as of Sept. 30, underscore the need for swift and effective solutions to mitigate the foreclosures that are at the root of the worst economic crisis in decades and the personal financial crises of millions of homeowners and their neighbors.
"Solutions to date offered by industry and the Bush administration have not been ambitious enough," said Paul Leonard, director of the California office of the Center for Responsible Lending. "Nor has California done enough to stem the rising tide foreclosures," Leonard said.
Risky adjustable rate mortgages (ARMs)—prime and subprime—continue to drive the nation's foreclosures, with California and Florida leading the way. The Golden State is home to approximately 54% of the nation's ARM foreclosures.
The nation and California need immediate action to rein in the massive foreclosures—until we do so, the economy, the marketplace and homeowners nationwide will continue to suffer. Importantly, we do not have to wait for the next administration. Serious efforts can and should be implemented immediately.
At the national level, the Treasury Department should introduce a mortgage modification plan that will allow for a large-scale rescue of homeowners quickly. The department should also implement the FDIC's proposal for the government to guarantee modified home loans as a way to induce loan servicers and investors to agree to such changes. In addition, Congress must act quickly to lift the ban on judicial modifications.
And California has weapons in its arsenal too, though anything done in California must be considered a complement to—not a substitution for—federal efforts. We must address the immediate crisis by passing the modest California Foreclosure Prevention Act, which would implement a 90-day foreclosure moratorium on loans from lenders without an aggressive modification plan to keep families in their homes.
Key California Points from the MBA Report:
- Nearly 11% of all California loans were delinquent or in foreclosure
- Of the 7.3 million outstanding loans in California, 112,000 started foreclosures and 449,000 were seriously delinquent
- Subprime ARMs in California fare worse than national subprime ARMs: 45.4% were delinquent or in foreclosure versus 42.7% nationally.
For more information: Ginna Green at (510) 379-5513 or ginna.green@responsiblelending.org.