According to DataQuick, a real estate information service, California reported record level notice of defaults (NODs) in the fourth quarter, the highest in eight years. During the October-to-December time frame, lending institutions sent 37,273 NODs, up 36.9 percent from the previous quarter and up 145.3 percent from the same time span in 2005.
Prior to last quarter, 38,053 is the highest number of NODs sent out, which took place in 1998’s third quarter. The highest recorded NODs was in 1996 at 61,541. Since 1992, when DataQuick began recording NOD statistics, an average of 33,615 NODs have been issued each quarter.

“Several factors are at play here,” said Marshall Prentice, president of DataQuick. “The numbers last year and the year before were very low because of strong sales and appreciation. Also, most defaults occur a year or two after the loan was made, so we’re in a period where the loan pool is at risk. And then there are those inventive loans that have been made the last few years, where qualifying involves assuming more risk. We’re in the midst of an adjusting market right now, and we won’t know until spring or summer if this is ominous or not.”
The majority of loans that went into default during the fourth quarter were originated between January 2005 and February 2006. The average age of the loans was 15 months. Primary mortgage loan homeowners were an average of five months late on their payments and six months behind on lines of credit.
Counties least likely to see mortgages go into default included Marin, San Francisco, and Santa Clara. Most likely counties were Merced, Riverside, and Tulare. Approximately 32 percent of homeowners who were at risk of default in early 2006 lost their homes in the fourth quarter.
For more information or to see DataQuick’s report in its entirety, visit www.dataquick.com.