Foreclosures surging in state

More California homeowners could be slipping into foreclosure as default notices climbed to the highest level in more than 15 years, a real estate information service said Tuesday.

DataQuick Information Systems of La Jolla reported that lenders sent 81,550 default notices in the last three months of 2007. The figure was up 115 percent from the same period a year ago.

Yuba, Sutter and Colusa counties appeared to be in the middle of the pack when it comes to percentage increases in default notices.

The numbers here more than doubled from the previous quarter. Yuba County led the three counties in total with 302 default notices, followed by Sutter County with 210 and Colusa County with 65.

But the jump for the three Mid-Valley counties was short of that seen in Merced, San Joaquin and Stanislaus counties, areas which had several times as many foreclosures.

Notices of default mark the first step in the foreclosure process and could provide an early warning to future problems.

A total of 31,676 homes ended up in foreclosure statewide during the quarter ending Dec. 31. The figure represents a 20-year high and jumped 421.2 percent from a year previous.

Declining home values appeared to be major factor in the foreclosures.

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

Dave Richardson, a Dobbins resident who owned a Sacramento lending business for a number of years, also pointed to depreciation. He added that interest rates rose though 2006, and that some loans should not have been made whatever the rate.

"If you owe $300,000 and it's worth $250,000, you might want to walk away," said Richardson, who said he was opening a Sacramento Home Loans mortgage business in Marysville.

He said the Federal Reserve's three-quarters of a percent benchmark interest rate cut Tuesday will make a big difference.

"They should have done that a year ago," said Richardson.

DataQuick estimated that 41 percent of homeowners emerge from foreclosure by bringing payments current, refinancing, or selling the home and paying it off.

That was down from 71 percent a year ago.

Factors such as a slow real estate market and multiple-loan financing are making "work-outs" difficult, according to DataQuick.

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

DEFAULT FIGURES

Fourth Quarter 2006

Colusa 26

Sutter 87

Yuba 130

California 37,994

Fourth Quarter 2007

Colusa 65

Sutter 210

Yuba 302

California 81,550

Contact Appeal-Democrat reporter John Dickey at 749-4711 or jdickey@appealdemocrat.com.