Real estate speculators account for a large share of failed loans in four states hard hit by foreclosures, according to a leading mortgage-lending trade association.
While non-owner occupied homes account for 13 percent of defaults among prime-rate mortgages across the country, the rate is much higher in Nevada, Florida, Arizona and California, according to a report by the Mortgage Bankers Associations released on Thursday.
Through the end of June, defaults among non-owner occupied homes with good credit terms were 32 percent in Nevada, 26 percent in Arizona, 25 percent in Florida and 21 percent in California, the group said.
"Defaults are on the rise in most parts of the country, but it is not always the case of a homeowner losing his or her home," Doug Duncan, the chief economist for the Mortgage Bankers Association, said in a statement. "It is often the case of an investor gambling on a continued increase in home values and losing that gamble."
Investors and builders flooded markets like Arizona, California, Florida and Nevada, pushing up the inventory and prices of homes. As the housing market has cooled in recent months, many of the investors who bought homes in those markets are now stuck with properties with ballooning payments and no ready buyers, Duncan said.
Among non-owner occupied homes with loans under subprime terms, default rates are also higher than the national average. While 11 percent of subprime non-owner occupied homes are in default across the country, those rates are 24 percent in Nevada, 14 percent in Florida, 18 percent in Arizona and 15 percent in California.
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