Released: January 28, 2010

California mortgage defaults drop

Source: Alejandro Lazo, L.A.Times (Free Registration)

The Obama administration’s $75-billion program to help troubled borrowers hold on to their homes appears to be keeping more California families out of foreclosure, data released Wednesday showed, but the relief may be temporary.

The number of homes entering the first stage of foreclosure declined 24.3% during the fourth quarter from the previous three months, according to MDA DataQuick, a San Diego real estate research firm. The decline in the default number is significant because any new wave of foreclosures, which could swamp the housing market’s recovery, would be preceded by a surge in defaults.

So far, thousands of California borrowers have had their mortgages modified through Obama’s Making Home Affordable program, but only 7.8% of those modifications were permanent through Dec. 31, according to government data. If the majority of borrowers who have received temporary loan modifications are unable to make those changes permanent, another surge of foreclosures could follow.

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