California Foreclosure Activity Up

February 2, 2006

La Jolla, CA.--Foreclosure activity in California edged up in fourth-quarter 2005, the result of lower appreciation rates, a real estate information service reported.

Lending institutions sent 14,999 default notices to California homeowners during the October-to-December period. That was up 19.0 percent from 12,606 for the third quarter, and up 15.6 percent from 12,978 for 2004's fourth quarter, according to DataQuick Information Systems.

Foreclosure activity hit a low during the third quarter of 2004 when 12,145 default notices were recorded. Defaults peaked in 1996's first quarter at 59,897. DataQuick's default statistics go back to 1992.

"There's always going to be a certain amount of financial distress. People lose their jobs, have medical emergencies, get divorced, pass away or make bad money decisions at a certain rate. Because of the rise in home values, much of that financial distress has been covered by the increasing amount of equity that people have had in their homes. That equity is now being created at a slower pace, and default activity is inevitably on the rise," said Marshall Prentice, DataQuick president.

The annual home appreciation rate in the state hit 22.8 percent during the second quarter of 2004. Since then it has come down and in fourth-quarter 2005 it was 14.5 percent. The appreciation rate is expected to fall below 10 percent sometime this summer.

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. The numbers count recorded notices of default, the first step of the formal foreclosure process.

The median amount owed when the default notice was recorded was $6,862 in fourth-quarter 2005, up from $6,130 for the same period a year ago.

Only about five percent of homeowners who find themselves in default actually lose their homes to foreclosure. Most are able to stop the foreclosure process by bringing their mortgage payments current, or by selling their home and paying the home loan(s) off.

All regions of the state saw an increase in foreclosure activity, ranging from 10.5 percent in the Bay Area to 19.6 percent in Southern California (see chart).

On a loan-by-loan basis, mortgages are least likely to go into default in Marin County. The likelihood is highest in the Central Valley and Inland Empire.

While foreclosure properties tugged property values down by almost ten percent in some areas nine years ago, the effect on today's market is negligible, DataQuick reported.

Notices of Default
houses and condos

County/Region	2004Q4	2005Q4	%Chg
Los Angeles	3,143	3,480	10.7%
Orange	684	918	34.2%
San Diego	872	1,173	34.5%
Riverside	1,123	1,607	43.1%
San Bernardino	1,292	1,473	14.0%
Ventura	254	261	2.8%
SoCal Total	7,453	8,912	19.6%
San Francisco	73	106	45.2%
Alameda	489	456	-6.7%
Contra Costa	477	541	13.4%
Santa Clara	463	489	5.6%
San Mateo	168	176	4.8%
Marin	47	51	8.5%
Solano	237	297	25.3%
Sonoma	108	143	32.4%
Napa	12	33	175.0%
Bay Area Total	2,074	2,292	10.5%
Santa Cruz	54	62	14.8%
Santa Barbara	71	83	16.9%
San Luis Obispo	42	66	57.1%
Monterey	75	94	25.3%
Coast Total	242	305	26.0%
Sacramento	646	849	31.4%
San Joaquin	446	464	4.0%
Placer	132	149	12.9%
Kern	417	424	1.7%
Fresno	430	518	20.5%
Madera	55	55	0.0%
Merced	121	118	-2.5%
Tulare	218	178	-18.3%
Yolo	35	64	82.9%
El Dorado	45	59	31.1%
Stanislaus	309	159	-48.5%
San Benito	30	31	3.3%
Yuba	18	30	66.7%
Sutter	26	28	7.7%
Cent. Valley Total	2,928	3,163	8.0%
Mountains Total	80	103	28.8%
North Calif Total	201	224	11.4%
Statewide	12,978	14,999	15.6%

Source: DataQuick Information Systems

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