Foreclosure Rates Rise in San Diego County, California
San Diego County is experiencing mortgage foreclosure rates not seen for the past eight years, two monitoring companies reported yesterday.
DataQuick Information Systems and RealtyTrac said foreclosures in the area totaled 171 last month, more than 10 times that of a year ago and the highest since 1998.
Similarly, the number of default notices — the first step lenders take toward foreclosure — was 872, nearly triple the 334 in September 2005, according to the San Diego Union Tribune.
RealtyTrac reported area default notices totaled 1,236, up from 287 a year ago, and notices of trust-deed sales — the final notice before foreclosure — were at 247, up from 56 over the same period.
Although the rising trend reported by the two companies is the same, the raw numbers reported by each differ because they track foreclosure rates differently, executives at each firm said.
“People who get into trouble are not able to use their homes to get out of trouble the way they were able to do when there was strong appreciation,” DataQuick analyst John Karevoll said, attributing the rise to the flattening of home prices.
Karevoll is referring to the ability of homeowners to refinance their homes and negotiate lower monthly home loan payments because of rising values and falling mortgage rates from 1997-2004.
But median home prices have been rising at a slower rate in the past two years and last month they actually declined on a year-over-year basis for single-family resale homes, DataQuick reported this week.
Foreclosures posted last month typically followed up on notices of default filed by lenders last December after three months of mortgage nonpayment.
The percentage of those December defaults going to foreclosures last month was 35.6 percent, more than seven times the 5 percent rate a year ago.
“We’re showing a huge jump because the numbers were so low last year and the year before,” Karevoll said.
But the latest default and foreclosure figures still represent a fraction of the number recorded a decade ago in San Diego’s last economic downturn.
The highest number of foreclosures during that period, 420, occurred in January 1997, just as housing prices were starting to rise. The highest number of default notices, 1,794, was filed in January 1996.
As more people struggle to pay their home loans on time, California posted the biggest increase in foreclosure activity of any state last month and nearly three times the number reported a year ago. The total — including all levels of foreclosure short of the actual sale — was 14,806, 13.2 percent of the total nationwide of 112,210.
Michael C. Fratantoni, an economist at the Mortgage Bankers Association, said the rising level of default notices and foreclosures in California still does not approach the national average.
As of June 30, he said, the percentage of foreclosed mortgages was 0.27 percent in California, compared with 0.99 percent nationally.
“In the mid-’90s, foreclosure rates in California were approaching 2 percent, almost 10 times higher than what we are seeing today,” he said.
Rick Sharga, marketing vice president for RealtyTrac, said few defaults end up in foreclosure, with homes ending up in the hands of lenders.
In San Diego last month, for example, only 62 properties were classified as “REO” or real estate owned by banks. Still, that was six times the 10 REOs counted in September 2005, according to RealtyTrac.
Sharga said the recent increases reflect the “first wave” of defaults and foreclosures stemming from the rise in adjustable-rate mortgages whose interest rates are rising too fast for some borrowers to afford.