CA.--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
Source: DataQuick Information Systems
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