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Record California Foreclosure Activity

www.dqnews.com

Lenders started formal foreclosure proceedings on a record number of California homeowners last quarter, the result of declining home prices, sluggish sales and subprime mortgage distress, a real estate information service reported.

A total of 72,571 Notices of Default (NoDs) were filed during the July-to-September period, up 34.5 percent from 53,943 during the previous quarter, and up 166.6 percent from 27,218 in third-quarter 2006, according to DataQuick Information Systems of La Jolla.

Last quarter's default level passed the previous peak of 61,541 reached in first-quarter 1996. A low of 12,417 was reached in third-quarter 2004. An average of 34,781 NoDs have been filed quarterly since 1992, when DataQuick's NoD statistics begin.

"We know now, in emerging detail, that a lot of these loans shouldn't have been made. The issue is whether the real estate market and the economy will digest these over the next year or two, or if housing market distress will bring the economy to its knees. Right now, most California neighborhoods do not have much of a foreclosure problem. But where there is a problem, it's getting nasty," said Marshall Prentice, DataQuick's president.

Half the state's default activity is concentrated in 293 zip codes, almost all of which are in the Inland Empire and Central Valley. Grouped together, those zip codes saw year-over-year home price increases that reached 34.0 percent in first quarter 2005. Prices peaked in third-quarter 2006 at $399,000. Last quarter's median of $352,250 is 11.7 percent off that peak.

In the 1,172 other zip codes, appreciation peaked in second-quarter 2004 at 25.0 percent. Last quarter's median of $575,000 was 2.5 percent below the prior quarter's peak of $590,000.

Most of the loans that went into default last quarter were originated between July 2005 and September 2006. The median age was 18 months. Loan originations peaked in August 2005. The use of adjustable-rate mortgages for primary purchase home loans peaked at 77.8% in May 2005 and has since fallen.

Because a residence may be financed with multiple loans, last quarter's 72,751 default notices were recorded on 68,746 different residences.

On primary mortgages statewide, homeowners were a median five months behind on their payments when the lender started the default process. The borrowers owed a median $10,914 on a median $344,000 mortgage.

On lines of credit, homeowners were a median eight months behind on their payments. Borrowers owed a median $3,355 on a median $66,351 credit line. However the amount of the credit line that was actually in use cannot be determined from public records.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. DataQuick provides online access to property information, including default notices. Notices of Default are recorded at county recorders offices and mark the first step of the formal foreclosure process.

The default numbers were a record in 39 of the state's 58 counties. In Los Angeles County it was 63.3 percent of the first-quarter 1996 peak.

On a loan-by-loan basis, mortgages were least likely to go into default in San Francisco, Marin and San Mateo counties. The likelihood was highest in Merced, San Joaquin and Riverside counties.

While numbers at the zip code level can fluctuate severely, among the zips with the biggest foreclosure problem are 95330 Lathrop in San Joaquin County, 92571 Perris in Riverside County and 95832 Sacramento.

Of the homeowners in default, just under half, 45.9 percent, emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was 80.9 percent. The increased portion of homes lost to foreclosure reflects the slow real estate market, as well as the number of homes bought during the height of the market with multiple-loan financing, which makes 'work-outs' difficult.

Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 24,209 during the third quarter. That is the highest number in DataQuick's statistics, which go back to 1988. Last quarter was up 38.7 percent from 17,458 for the previous quarter, and up 604.8 percent from 3,435 for last year's third quarter. The peak of the prior foreclosure cycle was 15,418 in third-quarter 1996, while the low was 637 in the second quarter of 2005.

There are 8.4 million houses and condos in the state.

Grouped together, foreclosure properties in 293 hardest-hit zip codes resold for 11 percent less than non-foreclosure homes. In the rest of the state foreclosure resales were near or at the price levels of other sold properties, DataQuick reported.

 

 

Notices of Default
houses and condos

County/Region

2006Q3

2007Q3

%Chg

Los Angeles

5,565

13,583

144.1%

Orange

1,500

3,882

158.8%

San Diego

2,355

5,673

140.9%

Riverside

3,040

9,250

204.3%

San Bernardino

2,548

7,038

176.2%

Ventura

578

1,377

138.2%

SoCal*

15,676

41,062

161.9%

San Francisco

149

252

69.1%

Alameda

803

2,126

164.8%

Contra Costa

1,012

3,216

217.8%

Santa Clara

670

1,655

147.0%

San Mateo

290

581

100.3%

Marin

89

172

93.3%

Solano

510

1,513

196.7%

Sonoma

231

749

224.2%

Napa

43

163

279.1%

Bay Area

3,797

10,427

174.6%

Santa Cruz

103

267

159.2%

Santa Barbara

188

598

218.1%

San Luis Obispo

94

249

164.9%

Monterey

202

751

271.8%

Coast

587

1,865

217.7%

Sacramento

1,761

4,947

180.9%

San Joaquin

898

2,961

229.7%

Placer

443

728

64.3%

Kern

741

2,196

196.4%

Fresno

789

1,807

129.0%

Madera

106

320

201.9%

Merced

282

1,076

281.6%

Tulare

268

595

122.0%

Yolo

101

303

200.0%

El Dorado

120

278

131.7%

Stanislaus

631

1,909

202.5%

Kings

46

108

134.8%

San Benito

63

178

182.5%

Yuba

66

227

243.9%

Colusa

18

54

200.0%

Sutter

77

155

101.3%

Central Valley

6,410

17,842

178.3%

Mountains*

185

417

125.4%

North California*

563

958

70.2%

Statewide

27,218

72,571

166.6%

* includes additional counties

 

 

 

 

Recorded Trustees Deeds
houses and condos

County/Region

2006Q3

2007Q3

%Chg

LOS ANGELES

535

3,627

577.9%

ORANGE

179

1,280

615.1%

SAN DIEGO

453

2,157

376.2%

RIVERSIDE

478

3,462

624.3%

SAN BERNARDINO

232

2,255

872.0%

VENTURA

77

454

489.6%

SOCAL TOTAL*

1,960

13,314

579.3%

SAN FRANCISCO

22

66

200.0%

ALAMEDA

115

674

486.1%

CONTRA COSTA

119

1,159

873.9%

SANTA CLARA

51

410

703.9%

SAN MATEO

37

155

318.9%

MARIN

4

41

925.0%

SOLANO

63

495

685.7%

SONOMA

33

201

509.1%

NAPA

5

41

720.0%

BAY AREA TOTAL

449

3,242

622.0%

SANTA CRUZ

17

71

317.6%

SANTA BARBARA

29

211

627.6%

SAN LUIS OBISPO

21

75

257.1%

MONTEREY

20

266

1230.0%

COAST TOTAL

87

623

616.1%

SACRAMENTO

343

2,065

502.0%

SAN JOAQUIN

119

1,136

854.6%

PLACER

45

294

553.3%

KERN

66

729

1004.5%

FRESNO

78

483

519.2%

MADERA

9

110

1122.2%

MERCED

30

423

1310.0%

TULARE

21

167

695.2%

YOLO

12

96

700.0%

EL DORADO

13

110

746.2%

STANISLAUS

73

752

930.1%

KINGS

5

18

260.0%

SAN BENITO

5

62

1140.0%

YUBA

16

108

575.0%

SUTTER

12

58

383.3%

CENTRAL VALLEY TOTAL*

852

6,630

678.2%

MOUNTAINS*

19

113

494.7%

NORTH CALIF*

68

287

322.1%

STATEWIDE

3,435

24,209

604.8%

 

 

 

 

* includes additional counties