A Mortgage Bankers Association report on Thursday showed that up to one in five mortgages in default in California belongs to a borrower who is not living in the home with the troubled loan.
The numbers were worse in Nevada, Arizona and Florida, where one-quarter to one-third of defaults as of June 30 were tied to investor loans, the trade group based out of Washington, D.C., said.
Mortgage bankers are coming under increasing fire for their role in pushing high-cost adjustable-rate loans on homeowners during the recent housing boom, forcing some into foreclosure. It has prompted some members of Congress and consumer advocates to recommend aid for borrowers on the verge of losing their homes.
But the mortgage bankers group suggests that some of these borrowers may not deserve to be saved. Many of the vacant, foreclosed homes dotting neighborhoods these days were bought by speculators who intended to "flip" their real estate investments for a quick profit but couldn't once the housing market slowed, said Doug Duncan, the trade group's chief economist.
"Defaults are on the rise in most parts of the country, but it should be recognized that it is not always the case of a homeowner losing his or her home but is often the case of an investor gambling on a continued increase in home values and losing that gamble," Duncan said.