For the first time in the nation, prime fixed-rate loans taken out by model Americans have become the largest share of foreclosures, surpassing those triggered by risky loans such as adjustable rate mortgages (ARMs). In the first quarter of 2009, 6.06% of prime fixed-rate loans were delinquent, up from 5.06% in the final quarter of 2008 nationally. With the surge of unemployment and massive pay cuts, even borrowers who took out the more prudent fixed rate loans have been struck by the mutating default-and-foreclose contagion.

first tuesday take: Get prepared. This default-and-foreclose epidemic will only become more widespread as unemployment continues to rise, a condition that will persist to be dealt with by real estate professionals in California long after the national recession has been declared over. The Golden State will only see light when employers are confident the foreclosure-flu is in permanent remission, at which point they will start to rebuild the ranks of the employed, and in turn agents will see an increase in homeownership once again.

In the meantime, the fallout of California homeowners (with commercial/industrial/office next) is creating a huge demand for services from the real estate brokerage community to counsel, assist and relocate owners who have jobs, and around 15,000,000 Californians still do. Find these individuals, and money will be made by all. It’s the current economic paradigm and it needs no rise in prices to function.

Re: “More Homeowners Facing Foreclosure” from the New York Times.