Industry NewsMortgage

California foreclosure starts set record

New law bought borrowers time, but Q1 defaults rise sharply

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A record number of California homes entered the foreclosure process during the first quarter when their owners defaulted on their mortgages, as the "nastiest batch" of loans made during the housing boom makes its way through the system, MDA DataQuick said. The 135,431 default notices sent out by lenders during the first three months of the year surpassed a previous high of 121,673 during the second quarter of 2008 by 11.3 percent. Notices of default are the first stage in the foreclosure process. Default notices had been on the decline -- 94,240 went out in the third quarter of 2008, and 75,230 during the fourth -- after a new state law took effect requiring lenders to jump through additional hoops before initiating the foreclosure process. Trustee deeds recorded -- which document the actual loss of a home to foreclosure -- totaled 43,620 during the first quarter, down 5.5 percent from the previous quarter and a 7.6 percent decline from a year ago. Trustee deeds...