California Mortgage Problems Rise in Santa Barbara County
The number of homeowners in Santa Barbara County who have fallen behind in their house payments has quadrupled over the past two years as the real estate market has cooled and many introductory mortgage interest rates have risen.
Across the Golden State, meanwhile, the number of notices of default - issued when a homeowner is late on California home loan payments, and the first step toward foreclosure - have hit the highest level in almost 10 years.
And foreclosures statewide increased more than 800 percent from the first quarter of last year to the first quarter of this year.
In Santa Barbara County between 2005 and 2006, notices of default more than doubled, increasing by 110 percent, from 400 to 841, according to officials in the county clerk-recorder-assessor’s office.
For 2007, default notices more than doubled again, from 841 to 1,978.
“Almost every neighborhood has one home in trouble,” said Wendy Teixeira, president of the Santa Maria Association of Realtors.
The number of sales involving properties that are owned by the lender is increasing, she added.
Santa Barbara County officials estimate that 1,978 homes will go into default this year and 765 properties will be taken by lenders.
Officials also estimate that 885 properties will be sold by mortgage lender institutions. The number of properties sold in a given year may exceed the number taken by lenders due to carry-over from the previous year.
Last year, county officials saw 841 notices of default and 129 properties taken by lenders. That year also had 293 properties sold by lenders.
In 2005, there were 400 notices of default in the county and 24 properties went back to the California mortgage lender, according to county data, and 116 properties were sold by lenders.
A notice of default is the formal notice given to an owner that the lender is proceeding with foreclosure until the loan is current, said David Brown, a Los Olivos-based mortgage broker who is also president of a local chapter of the California Association of Mortgage Brokers.
If the loan stays in default for 90 days, then the lender can post a notice of trustee sale, which tells the borrower the mortgage lender intends to sell the property unless the loan payments are brought up to date within another 21 days.
According to county officials, April 2007 made the top 10 list of highest-volume months since 1989 for notices of default and trustees’ deeds - when a mortgage company forecloses and takes ownership.
The years from about 1990 to 1997 saw a sharp increase and then gradual decline in notices of default, trustee deeds and trustee sales, when Southern and Central California were in an economic slump.
However, observers note that the economics surrounding the current spike in foreclosures and potential foreclosures differ in important ways from the 1990s.
This time, mortgage rates are lower and there haven’t been the immense job losses and unemployment that the area experienced in the ’90s, according to local economists.
Officials with the UCSB Economic Forecast Project note that foreclosures may not seriously harm the overall economy but they will affect home sales, keeping them slow for a while.
The increase in defaults and foreclosures may cause lenders to tighten their standards, making it harder for people to get home mortgage loans, said Dan Hamilton, with the UCSB forecast.
If that is the case, the slow-down may last longer than the usual two-year real estate cycle, he said.
Foreclosures statewide totaled 11,033 for the first quarter, up 81.5 percent from the previous quarter and up 802 percent from 1,223 from last year’s first quarter, according to DataQuick.
DataQuick officials noted many homeowners can avert foreclosure by bringing the loan current, seeking mortgage refinancing, or selling the real estate and paying off what is owed.
However, 40 percent of homeowners statewide who went into default last year lost their homes in the first quarter. That figure was 9 percent just one year ago.
SOURCE: Lompoc Record