The wave of foreclosures, which began in early 2007, was initially triggered by falling home values and resets on adjustable-rate loans. But lenders and industry analysts say the trend is now being exacerbated by rising unemployment, which has shot up to 9.3% in California.
“The people who are defaulting now are not really people who recklessly got into loans they never could have afforded,” said Evan Wagner, the communications director for IndyMac Federal Bank, a big mortgage lender that, having collapsed last year, is being bought by private investors. “These are people who have lost their jobs or who have had their hours cut back at work.”