New loan defaults might overshadow Sacramento's housing recovery

We're going to find out now whether foreclosure moratoriums and new loan-modification programs will work.

Banks and mortgage lenders filed a record 11,049 new notices of default in the capital region in the first three months of 2009, La Jolla property researcher MDA DataQuick reported Wednesday. The firm cited a similar sharp rise in default notices – following a several-month lull – across all of California's foreclosure belts.

The rise in defaults came as foreclosures fell for a second straight quarter across the capital region and California.

While the sudden spike in defaults suggested another major wave of repossessed homes to further drive down home prices, some analysts counseled caution Wednesday.

Bank of America spokesman Rick Simon said some of the uptick is a resumption of processing notices of default delayed last fall and winter during an early round of foreclosure moratoriums.

"The loans that were deemed eligible for that were not advanced for foreclosure during that time," he said.

"Some is catch-up, and some is just new default activity related to job losses," said DataQuick analyst Andrew LePage.

Unemployment reached 11.3 percent in the El Dorado, Placer, Sacramento and Yolo counties region in March and is expected to top 12 percent. Statewide unemployment in March stood at 11.2 percent.

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