Foreclosure starts increased significantly in California, Florida, Nevada and Arizona, the MBA said. ” Were it not for the increases in foreclosure starts in those four states, we would have seen a nationwide drop in the rate of foreclosure filings,” said Doug Duncan, the MBA’s chief economist.
So what does the Mortgage Bankers Association pin the cause?
Duncan says that the formerly booming housing markets in California, Florida, Nevada, and Arizona opened the door to investor loans, or loans to buyers who do not plan on living in the houses. But as the housing bubble burst and housing prices fell, these speculators have abandoned their mortgages, driving up foreclosure rates.
This is why interest rates are higher on loans to investors. Investors are a lot more likely to walk away from an investment than a homeowner who has to move out to walk away.
Just for the record, they are talking about increases in foreclosures. States like Michigan and Ohio have higher absolute foreclosure rates but their rates didn’t increase much in the second quarter.