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California Foreclosure Notices at 10-Year High

April 17, 2007

Mortgage Crisis? Act Now to Avoid Foreclosure • Avoiding Foreclosure Takes More Than Hope --- • Home Prices Fall, But News Is Less Bad For Homeowners • Marketing Analysis Suggests Housing Bottom • Mortgage Rates Dip As Inflation Fears Ease • Have Mortgage Rates Hit Bottom? • Ex-Countrywide CEO Faces Fraud Charges • Pending Home Sales Surge in April • Foreclosure Starts Hit 1 Million For the Year • Mortgage Delinquencies At Record High • Existing Home Sales Rise in April • U.S. Home Values Now 32 Percent Below Their Peak • Bankruptcy Not Helping People Keep Their Homes • Home Values Plunge 14 Percent In First Quarter • One In Five Homeowners Underwater • Pending Home Sales Turn Around In March • Senate Defeats Mortgage 'Cram Down' Bill • Mortgage Rates Keep Falling • Home Sales Fall in March • Home Prices Show Surprising Gain in February • Foreclosures Up 9% in First Quarter • Southern California Home Sales Up Again in March • Mortgage Applications Rise Sharply • Obama Administration Targets Mortgage Fraud • Homeowners Still Behind On Modified Mortgages • Consumers Fall Further Behind on Loan Payments • Pending Home Sales Show Some Life • Home Prices Down To 2003 Levels in January • Fed Action Spurs Refinance Frenzy • Existing Home Sales Jump Five Percent in One Month • California Authorities Arrest "Loan Modification" Scam Artists • Southern California Home Sales Up Again • Loan Modifications Can Reduce Foreclosures, Study Says • Scammers Use Forged Bank Letterhead to Con California Consumers • Foreclosure Activity Up Six Percent in February • States Battle Feds To Enforce Lending Laws • Mortgage Delinquencies Continue to Climb • Obama Begins Mortgage Rescue Program • One Of Five U.S. Mortgages Under Water • Florida Court Blocks Loan Modification Company's Fees --- • More ...

Like a canary in a coal mine, California may be sending the mortgage industry an urgent message. Foreclosure notices sent to the state's homeowners in the first quarter of 2007 jumped to their highest level in almost ten years, according to DataQuick, a real estate information service.

Lending institutions filed 46,760 Notices of Default (NoDs) during the January-to-March period. That was up by 23.1 percent from a revised 37,994 for the previous quarter, and up 148.0 percent from 18,856 for first-quarter 2006, according to DataQuick Information Systems.

Meanwhile, federal regulators reminded lenders that they should work with consumers who fall behind. There is no need to instigate immediate foreclosure proceedings, the regulators said. Institutions that bend the rules to keep consumers in their homes will not be penalized, the agencies said.

Last quarter's default level was the highest since 47,912 NoDs were recorded in California in the second-quarter of 1997. Defaults peaked in first quarter 1996 at 61,541. An average of 33,847 NoDs have been filed quarterly since 1992, when DataQuick's NOD statistics begin.

"Defaults tend to happen after a certain length of time and today's activity reflects a peak in the number of home loans made back in the summer of 2005," said Marshall Prentice, DataQuick's president.

"Additionally, the loans being made back then were riskier because of the subprime activity, as well as higher appreciation rates. It's easier to make a loan when the security for that loan is going up in value, than when values are flat."

Most of the loans that went into default last quarter were originated between April 2005 and May 2006. The median age was 15 months. Loan originations peaked in August 2005. Adjustable-rate mortgage use for primary purchase home loans peaked at 77.8% in May 2005 and has come down since.

On primary mortgages, homeowners were a median five months behind on their payments when the lender started the default process. The borrowers owed a median $10,784 on a median $331,200 mortgage.

On lines of credit, homeowners were a median six months behind on their payments. Borrowers owed a median $3,580 on a median $60,000 credit line. However the amount of the credit line that was actually in use cannot be determined from public records.

The default numbers reflect wide regional differences. The first-quarter numbers were a record in San Diego, Sacramento and Contra Costa counties. In Los Angeles County it was almost 60 percent below the first-quarter 1996 peak, reflecting the depth of the recession in the mid-1990s as well as relative strength in today's market.

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

Most homeowners emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. Still, about 40 percent of homeowners who found themselves in default last year actually lost their homes to foreclosure in the first quarter, according to the report. A year ago it was nine percent.

Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 11,033 during the first quarter, up 81.5 percent from 6,078 for the previous quarter, and up 802.1 percent from 1,223 for last year's first quarter. Foreclosure sales peaked at 15,418 in third-quarter 1996, and hit a low of 637 in the second quarter of 2005.

There are just over eight million houses and condos in California, according to the firm.

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