Downey Financial: A Runaway Train of Defaulting Borrowers

Friday I updated my Downey Financial (DSL) survey of defaults and trustee's sales for January 2008. It's based on a sample of San Diego, San Joaquin, and Solano counties only. See the footnote for more on how this data is collected. (1).

I was waiting to see whether the jump in December was just an aberration related to the end of the year. Nope! Looks to me like a runaway train of defaulting borrowers.

This suggests that the Downey 8-K (which should come out in two weeks) will once again show massively higher non-performing assets.

(1) Not all counties make this data easily available online (especially in California). Los Angeles does not provide online access, and many of the counties that do have extremely cumbersome interfaces. My surveying method is to count all of the default notices and all of the notices of trustee's sale and trustee deeds during the time period. I do not make any adjustments for notices of rescission of default. I have found this data to be an excellent leading indicator, but no warranty is made as to its accuracy.

Disclosure: Own DSL Puts.