California Foreclosure Activity Still Rising

January 22, 2008

La Jolla, CA.--The number of mortgage default notices filed against California homeowners jumped last quarter to its highest level in more than fifteen years, a real estate information service reported.

Lending institutions sent homeowners 81,550 default notices during the October-to-December period. That was up by 12.4 percent from 72,571 the previous quarter, and up 114.6 percent from 37,994 for fourth-quarter 2006, according to DataQuick Information Systems.

Last quarter's number of defaults was the highest in DataQuick's statistics, which go back to 1992.

"Foreclosure activity is closely tied to a decline in home values. With today's depreciation, an increasing number of homeowners find themselves owing more on a property than it's market value, setting the stage for default if there is mortgage payment shock, a job loss or the owner needs to move," said Marshall Prentice, DataQuick's president.

The median price paid for a California home peaked at $484,000 last March and declined to $402,000 by the end of 2007, although much of that decline was caused by significant shifts in the types of homes that were sold.

Most of the loans that went into default last quarter were originated between August 2005 and October 2006. The median age was 22 months, up from 15 a year earlier, indicating that the pool of at-risk home loans is getting larger.

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 $11,121 on a median $340,000 mortgage.

On lines of credit, homeowners were a median seven months behind on their payments. Borrowers owed a median $3,379 on a median $56,000 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.

Last quarter's default numbers were a record in 42 of the state's 58 counties. In Los Angeles County it was 63.5 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 Stanislaus counties.

Of the homeowners in default, an estimated 41 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 about 71 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 31,676 during the fourth quarter. That's the highest since DataQuick began tracking Trustees Deeds in 1988. Last quarter's total rose 30.8 percent from 24,209 in the previous quarter, and jumped 421.2 percent from 6,078 in fourth quarter 2006. In the last real estate cycle, Trustees Deeds peaked at 15,418 in third-quarter 1996. The all-time low was 637 in the second quarter of 2005.

There are 7.9 million houses and condos in the state, DataQuick reported.

Notices of Default
houses and condos

County/Region 2006Q4 2007Q4 %Chg
Los Angeles 7,445 13,613 82.8%
Orange 1,983 4,276 115.6%
San Diego 3,150 6,151 95.3%
Riverside 4,528 9,913 118.9%
San Bernardino 3,538 7,288 106.0%
Ventura 794 1,504 89.4%
Imperial 167 401 140.1%
SoCal 21,605 43,146 99.7%
San Francisco 173 334 93.1%
Alameda 1,173 2,573 119.4%
Contra Costa 1,511 3,805 151.8%
Santa Clara 874 2,162 147.4%
San Mateo 339 625 84.4%
Marin 101 224 121.8%
Solano 781 1,793 129.6%
Sonoma 323 968 199.7%
Napa 87 220 152.9%
Bay Area 5,362 12,704 136.9%
Santa Cruz 134 312 132.8%
Santa Barbara 298 563 88.9%
San Luis Obispo 119 291 144.5%
Monterey 291 1,048 260.1%
Coast 842 2,214 162.9%
Sacramento 2,635 5,807 120.4%
San Joaquin 1,293 3,746 189.7%
Placer 540 850 57.4%
Kern 1,044 2,631 152.0%
Fresno 1,059 2,103 98.6%
Madera 130 375 188.5%
Merced 466 1,413 203.2%
Tulare 427 817 91.3%
Yolo 188 363 93.1%
El Dorado 199 304 52.8%
Stanislaus 909 2,594 185.4%
Kings 56 134 139.3%
San Benito 56 232 314.3%
Yuba 130 302 132.3%
Colusa 26 65 150.0%
Sutter 87 210 141.4%
Central Valley 9,245 21,946 137.4%
Mountains* 215 444 106.5%
North Calif* 725 1,096 51.2%
Statewide 37,994 81,550 114.6%
* includes additional counties

Source: DataQuick Information Systems

Media calls: Andrew LePage (916)456-7157 or John Karevoll (909)867-9534

Copyright 2008 DataQuick Information Systems. All rights reserved.

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