Mortgage defaults drop 24% in California

Could the worst be over for California's housing market? During the last quarter of 2009, mortgage defaults in the state -- which is a precursor to foreclosure proceedings -- fell by 24%. From an L.A. Times story:

The number of homes entering the first stage of foreclosure, or receiving notices of default, declined 24.3% during the fourth quarter from the prior three months, according to county data collected by MDA DataQuick, a San Diego research firm. The decline in the default number is significant because any new wave of foreclosures will first be detected by that measure, according to the firm...

At the same time, big banks are feeling intense pressure in Washington to work with troubled borrowers through the Obama administration's Making Home Affordable program. Much of that relief has been temporary. Through December, banks had lowered mortgage payments for 172,288 California borrowers, but only 7.8% of those modifications were permanent, according to government data.

Many experts consider that record a failure and fear that if the government doesn't improve its performance, those loans eventually will go into foreclosure and put pressure anew on the state's housing market...

Those figures indicate that the Obama administration's efforts to help troubled homeowners have allowed some borrowers to stay out of default but kept many in a kind of late stage of delinquency limbo, said Celia Chen, senior director of Moody's Economy.com. If the majority of borrowers who have received temporary loan modifications under Obama's program are unable to get permanent changes to their mortgages, another wave of foreclosures could follow, she said.