October 25, 2006

Default Notices on the Rise

©Sacramento Bee, 2006

The number of homeowners on track to lose their homes after missing at least two mortgage payments continues a yearlong rise across California and much of the capital region, new pre-foreclosure statistics indicate.

Notices of default in July, August and September -- the first indication that homeowners are having trouble paying their mortgages -- more than doubled over the same time last year in most of the region's eight counties, according to La Jolla-based DataQuick Information Systems.

"There's always a certain amount of financial distress out there. But it's no longer being masked by home appreciation," said DataQuick analyst Andrew LePage.

While the numbers are up from historic lows of last year, they remain well below 1990s highs in all but Placer County. Placer County's 443 notices topped the county's previous record of 322 in the first quarter of 1996.

But DataQuick officials noted the county has more than doubled its numbers of homes since the early 1990s.

Sacramento County's 1,388 notices during this year's third quarter were more than 1,000 fewer than its previous 1997 quarterly record of 2,441.

Yolo County's 101 notices were 62 below its second-quarter 1998 peak of 163, while El Dorado County's 120 were below a quarterly 1992 high of 167.

Comparisons were not available for other area counties.

Statewide, DataQuick reported 26,705 notices sent by lenders to homeowners after missed payments in July, August and September, more than double the lows of the same time last year.

Traditionally, only 5 percent to 6 percent of default notices end up in foreclosure. But the percentage is growing with the state's housing downturn. DataQuick said 19 percent of California homeowners who found themselves in default earlier this year lost their homes to foreclosure during July, August and September.

"Most people still get out of it by selling the house, paying off the lender or somehow managing to get their payments current," LePage said. "Most people avoid foreclosure sales."