Mortgage Defaults May Have Peaked

Almost 20,000 Notices of Default (NOD's) were recorded in the Bay Area during the second quarter of last year. Default activity has fallen rapidly since then. In the fourth quarter (the latest available), the number of NOD's came in more than 30% lower, at roughly 13,600.

San Francisco County has experienced a similar decline in default activity. There were 607 Notices of Default recored in the City during the third quarter of 2009. The fourth quarter figure came in almost 25% lower, at 465.

Note: The abrupt decline in NOD's during the third and fourth quarters of 2008 resulted from lender uncertainty in the face of legislative changes. Keep in mind that the chart shows recorded Notices of Default, not actual instances of default.

Two quarters don't make a trend. But the recent stability in home prices and employment suggest that mortgage default activity will continue falling.