Foreclosures In Full Boom

In ominous sign of more to come, capital region default notices also hit record highs during first quarter of 2007.

There's a new kind of "For Sale" sign appearing in the region's neighborhoods -- offering property repossessed by the banks -- and there will be more, according to the newest round of statistics.
Both notices of default, the first sign that homeowners are having trouble making payments, and foreclosures reached historic highs across much of the Sacramento area during January, February and March, a property research firm reported Monday.
Among many who received a default notice in March after missing payments was Mary Ann Wilson of Elk Grove.
"We had our house built in 2003, and we were both working, both making very good money, and in June 2006 I got sick," she said.
The slow descent into default on a home equity loan ended Monday when the house was sold in a short sale in which lenders accepted less than owed to avoid greater losses.
"It was very difficult, very emotional, very hard for us," Wilson said Monday two weeks after major surgery.
The statistics behind such stories are the newest indication of stress in one of California's most troubled major housing markets. They come as spring sales already are slowing amid a glut of resale inventory and tightening of borrowing standards by lenders.
Real estate industry analysts call the region's defaults an echo from the surge of home loans made during the summer of 2005 as the region's real estate market soared. That summer, capital region buyers stretched their hardest to buy homes, with about 76 percent using adjustable rate loans, according to DataQuick Information Systems of La Jolla.
Many of those loans, as well as refinancings to tap housing boom equity for things like swimming pools and cars, are resetting to higher payments and pressuring the area's economy.
"You can't party that hard and not have a hangover. You just can't do it," said Keith McLane, who watches the market as principal of Carmichael-based West Coast Home Auctions, which offers sellers a quick sale for a lower price.
Notices of default -- issued after a homeowner misses at least two monthly mortgage payments -- reached their highest levels ever during this year's first quarter in Amador, El Dorado, Sacramento, Sutter, Yolo and Yuba counties, DataQuick reported.
The number of defaults stopped rising only in Placer County. Nevada County remains below previous highs reached in the 1990s, DataQuick reported.
First-quarter foreclosure numbers also reached highs across much of the region -- in Sacramento, Placer, El Dorado, Yolo and Sutter counties -- according to DataQuick, which tracks county property records.
DataQuick said 1,505 homeowners in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties lost their houses to foreclosure during January, February and March. That's up from 865 the previous three months.
DataQuick reported just 143 foreclosures in the eight-county region in the first quarter of 2006.
"A lot of these lenders are going to end up with an awful lot of properties," said Pam Canada, executive director of Sacramento-based NeighborWorks HomeOwnership Center, which counsels people with mortgage trouble.
"It's been difficult these past weeks particularly. There's more of a tone of desperation from people we're finding now. They have very few alternatives."
DataQuick attributed part of the record-breaking numbers to a greater supply of homes and loans in the Sacramento region since previous records were established during the recession-plagued mid-1990s. But the bigger factor is a combination of risky 2005 and 2006 loans and falling home prices that make it difficult for owners to refinance out of trouble. Even in a time when the economy continues to generate job growth, selling the house is becoming harder.
"It makes all the sense in the world," said Andrew LePage, DataQuick analyst. "This is probably the weakest (housing) market in the state, and showing some of the biggest year-over-year declines in home prices and some of the slowest sales."
Still, the Sacramento region has plenty of troubled company. Statewide, defaults reached a 10-year high during the year's first quarter. Among major urban counties Riverside and Contra Costa counties also had record levels of defaults, DataQuick reported.
Nationally, Yuba County ranked ninth and Sacramento 16th among more than 1,000 counties for the percentage increase of defaults from the first quarter of 2006, according to ForeclosureS.com, a Fair Oaks-based Web site that tracks them for investors. Placer and El Dorado counties ranked 19th and 20th.
Alexis McGee, the site's president and co-founder, said many of those in default are first-time buyers.
"I don't think a lot of them are going to stick," she said.
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Written by Jim Wasserman - Bee Staff Writer