It looks like the mortgage defaults and foreclosures in California are not happening in the coastal regions but in the inland parts of the state. This is pretty logical as those that are buying the prime properties are not stretching as much as those who are willing to commute longer distances to get into their first homes.

Also, my guess is that in many of the new home developments the builder was qualifying everybody that walked in knowing that the sale of the home at higher margins was worth the risk of bad loans coming back at a later date. All I can say know is that they better hope so.

Most mortgages in California that went into default in the first quarter were originated between April 2005 and May 2006 and their median age was 15 months.
According to DataQuick, mortgages were least likely to go into default in Marin, San Francisco and San Mateo counties, three affluent coastal markets with a tight supply of housing that has helped prevent home prices from slipping.
The likelihood of default was highest in inland Sacramento, Riverside and San Joaquin counties, where prospective first-time home buyers rushed in during the housing boom in search of relatively affordable housing.
Squeezed from pricey coastal markets, many Californians moved to such interior areas and used adjustable-rate mortgages to purchase houses in scores of new-home developments. They now are facing higher interest rates on their loans and rising mortgage payments while home values in those markets decline. via Reuters.com

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