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Study: refinancing, not buying at top, caused most SoCal defaults
Wednesday, July 29th, 2009 | Economics |
Via Calculated Risk:
Michael LaCour-Little, a finance professor at California State University at Fullerton, looked at 4,000 foreclosures in Southern California from 2006-08. He found that, at least in Southern California, borrowers who defaulted on their mortgages didn’t purchase their homes at the top of the market. Instead, the average acquisition was made in 2002 and many homes lost to foreclosure were bought in the 1990s. More than half of all borrowers who lost their homes had already refinanced at least once, and four out of five had a second mortgage.
Right after I bought my house I visited my Uncle John in Georgia. When he found out I had a house he said, simply, “Good. Now don’t ever get a second mortgage.”
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