California Foreclosure Activity Up

May 2, 2006

La Jolla, CA.——First-quarter foreclosure activity in California increased to the highest level in more than two years, the result of slower home price increases, a real estate information service reported.

Lending institutions sent 18,668 default notices to California homeowners during the January-to-March period. That was up 23.4 percent from 15,122 for the prior quarter, and up 28.7 percent from 14,501 for 2005's first 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.

"A number of factors are driving defaults higher," said Marshall Prentice, DataQuick's president. "The main one right now is that home values are rising more slowly than they have been the past couple of years, which makes it more difficult for homeowners to sell their homes and pay off the lender. Other factors that influence default activity include the amount of equity people have in their property, the type of mortgage they used and how long they've had that mortgage."

Statewide, the annual rate of home price increases hit a high of 22.8 percent during the second quarter of 2004. Since then, price appreciation has cooled to an annual gain of 12.4 percent in the first quarter of this year. Last quarter, San Diego County saw home values rise 4.8 percent, while its default activity jumped 59.7 percent. San Bernardino County saw home values rise 26.2 percent and defaults increase 17 percent

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 first-quarter default amount on a primary mortgage last quarter was $9,220 on a loan of $280,000. On second mortgages and lines of credit the median amount owed was $3,386 on a loan of $56,760.

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.

On a loan-by-loan basis, mortgages are least likely to go into default in the Bay Area. 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	2005Q1	2006Q1	%Chg
Los Angeles	3,535	4,211	19.1%
Orange	775	1,107	42.8%
San Diego	960	1,533	59.7%
Riverside	1,307	2,148	64.3%
San Bernardino	1,427	1,670	17.0%
Ventura	261	433	65.9%
SoCal Total	8,330	11,102	33.3%
San Francisco	104	127	22.1%
Alameda	516	564	9.3%
Contra Costa	576	605	5.0%
Santa Clara	500	527	5.4%
San Mateo	188	186	-1.1%
Marin	64	76	18.8%
Solano	269	294	9.3%
Sonoma	139	157	12.9%
Napa	29	47	62.1%
Bay Area Total	2,385	2,583	8.3%
Santa Cruz	67	108	61.2%
Santa Barbara	93	133	43.0%
San Luis Obispo	70	75	7.1%
Monterey	79	129	63.3%
Coast Total	309	445	44.0%
Sacramento	763	1,136	48.9%
San Joaquin	451	586	29.9%
Placer	126	239	89.7%
Kern	406	461	13.5%
Fresno	494	540	9.3%
Madera	55	79	43.6%
Merced	135	153	13.3%
Tulare	211	212	0.5%
Yolo	42	48	14.3%
El Dorado	62	54	-12.9%
Stanislaus	291	451	55.0%
San Benito	27	49	81.5%
Yuba	23	48	108.7%
Sutter	31	28	-9.7%
Central Valley Tot.	3,117	4,130	32.5%
Mountains Total	110	96	-12.7%
North Calif Total	250	312	24.8%
Statewide	14,501	18,668	28.7%

Source: DataQuick Information Systems

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