San Diego sub-prime lender submerging.

A noticeably slowed housing market and increasing interest rates, and hence monthly payments, on adjustable rate mortgages combined in recent months to create the surge of delinquencies, said Charles Tu, an associate professor at the University of San Diego’s Burnham-Moores Center for Real Estate.

Before last year, homeowners who missed mortgage payments and got into trouble could sell their properties and come out ahead because of appreciating home values. But that changed last year, Tu said, with the slowing of the residential market.