Walk or stay?

In releasing the latest delinquency and foreclosure numbers today, the Mortgage Bankers Association placed much of the blame for the record rate of loans entering foreclosure nationwide on four states: California, Florida, Nevada and Arizona.

Those states have more than a third of the nation's subprime ARMs, and when you look at loans in default, a staggering number are held by borrowers who don't live in the homes securing the loans. In other words, they are investors or speculators (or they've let the mortgage on their vacation home go...).

In California, the MBA estimates, about one in five purchase loans 90 days past due or in foreclosure was used to buy an investment property or second home, as opposed to a primary residence. The numbers are even higher in Nevada (32 percent) and Florida (25 percent).

Investors are much more likely to walk away from a home if property values fall than folks who live in their homes, and home prices fell during the second quarter in 52 of the 59 metropolitan statistical areas tracked by the Office of Federal Housing Enterprise Oversight in those four states.

The blog Sacramento Area Flippers In Trouble offers some concrete (and stucco) examples that illustrate the point: hundreds of houses on the market at discounts of 10, 20, 30 percent or more from the last sales price. Not all of these homes are necessarily in foreclosure, but you have to believe many will end up there.

And seeing some actual properties brings the statistics to life. Can't vouch for it, but the blog also offers this statistic: the projected losses on 1,451 properties the site's tracking in Sacramento County total $85.4 million.

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