Real Estate Blog

Statistics released Tuesday showed the number of area homeowners missing at least two monthly mortgage payments reached record levels during April, May and June. The number of homeowners ultimately losing their residences to banks also surged.

The second-quarter numbers were stark for the state as well. DataQuick Information Systems reported that 53,943 homeowners -- the highest in 10 years -- had missed at least two mortgage payments. Another 17,408 lost their homes in foreclosures. DataQuick analysts warned the numbers could begin tugging down property values in the hardest-hit neighborhoods, especially in the San Joaquin Valley and Inland Empire.

Banks foreclosed on 2,251 homes during April, May and June in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to La Jolla-based DataQuick.
That was up 49.5 percent from 1,505 foreclosures the first three months of this year.

DataQuick also reported that 5,201 more households received notices of default when they fell behind on mortgage payments during the second quarter in El Dorado, Placer, Sacramento, Sutter, Yuba and Yolo counties. That was up 17 percent from the first quarter.

Banks file default notices when owners miss two or three monthly payments.

Most of the loans going into default during the second quarter were taken out between July 2005 and August 2006, DataQuick said. During that time, Sacramento-area home prices peaked and sales slowed, leading to a fall in sales prices that continue today.

Analysts see the foreclosure storm continuing for at least another year because of the number of riskier adjustable-rate loans taken out in the past two years and the inability of many to refinance homes worth less than what’s owed on them. Selling a house to forestall trouble also is increasingly difficult in a regional market with more than 15,000 existing homes for sale.

If there’s a potential silver lining to the situation, it’s this: The rate of growth in both the numbers of foreclosures and households missing mortgage payments has slowed slightly. The 17 percent growth rates for notices of default the past two quarters are well below the 47 percent growth rate of the final quarter of 2006.
The second quarter’s 49.6 percent rise in foreclosures also was down from 74 percent in first quarter 2007.

DataQuick has noted the number of defaults could level off as the state moves far enough beyond the peak borrowing period of summer 2005.

"Typically, if a loan is going to go bad, it goes bad in the first year and a half," said DataQuick analyst Andrew LePage. "If we get to the end of this year and notices of default are still growing across the state, we’ll know if this problem is deeper than we thought."
Mortgages were most likely to go into default in San Joaquin, Merced and Riverside counties and least likely in Marin, San Francisco and San Mateo counties.

The latest numbers come as home foreclosure auctions have made a dramatic return in California and calls to nonprofit home loan counselors have skyrocketed.

It’s also become a time for blame. Some say buyers should have known better than to stretch themselves so far. Others blame lenders who offered easy 100 percent financing and "teaser-rate" loans with interest as low as 1 percent, often without checking a borrower’s income.