In 2008, California vied with Florida as the state with the lousiest mortgages, recording nearly double the national average rate of homes going into foreclosure.
Today, although still reeling from the mortgage meltdown, the Golden State is looking more like the rest of the country, according to the latest Mortgage Bankers Assn. quarterly delinquency report, released Wednesday.
Two years ago, surging defaults stemmed from the sheer unaffordability of the subprime and other adjustable-rate loans that inflated California's housing bubble. Now, with job losses the main cause of missed payments, the old-economy states of the Midwest have become the major mortgage worry spots, said Jay Brinkmann, chief economist for the mortgage banking group.
"We're now going back to looking at states like Michigan, Ohio and Illinois, which had foreclosure problems for many long years before California," Brinkmann said.
After adjusting for seasonal factors, the national rates for past-due loans and loans in foreclosure edged up slightly in the first quarter to new records, the trade group said. One in 10 borrowers was seriously delinquent — at least 90 days late or in foreclosure — in the first three months of the year, up from one in 14 a year ago and one in 25 two years ago.
But the tide of delinquencies is showing signs of ebbing, Brinkmann said. On an unadjusted basis, the combined percentage of U.S. home loans in foreclosure or at least one payment past due fell to 14% in the first quarter from 15% at the end of 2009.
The seasonally adjusted numbers "should be viewed with a degree of caution," Brinkmann said, because the economy has begun to generate jobs and layoffs have declined — factors he said could override the normal seasonal variation.
About half the states recorded year-over-year increases in the rate of foreclosure starts, with the sharpest growth in North Carolina and Maryland.
In California, new foreclosures accounted for 1.34% of all loans in the first quarter, down sharply from a year earlier and only slightly higher the national average of 1.23%. Topping the list were Nevada with a rate of 3.23%, followed by Florida at Arizona, both at more than 2%.
In another positive sign for California, home prices in Los Angeles County and the Inland Empire rose more than 2% in March, and more than 4% excluding foreclosure sales and other distressed transactions, real estate data firm CoreLogic said Wednesday.
UCLA real estate lecturer Paul Habibi said California was benefiting from growth in its diverse economy and from the fact that the mortgage crisis struck so early in the state.
"So we're able to come out of it a little quicker than other states," he said.