FORECLOSURES CLIMB IN STATE.

Byline: GREGORY J. WILCOX Staff Writer

Home loan delinquency rates in California mushroomed in the second quarter and far outdistanced the national pace as the residential real estate slump deepened, an industry tracker said Wednesday.

Of the 5.5 million mortgages tracked by the Mortgage Bankers Association, 2.18 percent were past due in the April through June period, an annual increase of 16.5 percent.

And 0.53 percent were in foreclosure, an annual increase of 43.2 percent, the Washington, D.C.-based association said.

In comparison, the nation's delinquency rate increased an annual 1.6 percent while those in foreclosure rose 3.3 percent.

While the state had a bigger percentage increase, the percent of homeowners in trouble was smaller. And California has the highest number of loans in the country.

Nationwide, 4.37 percent of the 42.5 million loans sampled were delinquent and 1.89 percent were in foreclosure.

``California is near if not at its historical lows, so that would imply that it's got no place to go but up,'' Doug Duncan, the association's chief economist said during a conference call on the second quarter numbers.

Overall, the economy and housing market decelerated in the second quarter, he noted. And although labor markets remain strong, job growth has slowed, as has the price appreciation.

The latter is a reaction to higher interest rates and rising inventories of homes on the market.

One concern is the increases in delinquency rates for subprime loans, particularly for adjustables.

For example, in California the survey tracked 798,367 subprime loans and 7.33 percent were delinquent in the second quarter while 2.29 percent were in foreclosure. A year ago it was 5.13 percent and 1.28 percent, respectively.

Nationally, 10.4 percent of subprime loans were past due and 5.81 percent were in foreclosure.

``Going forward we expect some further slowing in the economy and the housing market. As a result, we will see modest increases in delinquency and foreclosure rates in the quarters ahead,'' said Duncan.

Independent market analyst Nima Nattagh said that while foreclosure activity is increasing in the state, it is not yet at the point where it can push prices down.

He said that lenders report that late mortgage payments and defaults are increasing but that was expected because of some of the risky lending practices used over the past several year to counter soaring prices.

``The worst scenario is if a homeowner finds themselves in a situation where they can't keep up with the mortgage payments they can sell without getting into foreclosure,'' he said.

greg.wilcox(at)dailynews.com

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