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REALTOR®: Foreclosure Activity Up, but Micro-markets Continue to Do Well

Wednesday, April 30, 2008

The number of California homes going into foreclosure increased last quarter as the market continued to works its way through declining home values and a pool of at-risk mortgages, according to a real estate information service.

Lending institutions sent homeowners 113,676 default notices during the January-to-March period, up 39.4 percent from 81,550 the previous quarter, and up 143.1 percent from 46,760 for first-quarter 2007, according to DataQuick Information Systems.
Most of the loans that went into default last quarter were originated between August 2005 and October 2006. The median age was 23 months, up from 16 months a year earlier.

On primary mortgages, homeowners were a median five months behind on their payments when the lender started the default process. The borrowers owed a median $11,474 on a median $346,750 mortgage.
On home equity loans and lines of credit, homeowners were a median eight months behind on their payments. Borrowers owed a median $3,512 on a median $60,000 credit line.

Although 113,676 default notices were filed last quarter, they pertained to 110,392 homes because some borrowers defaulted on multiple loans, e.g. a primary mortgage and a line of credit.

Lenders sent Santa Clara County homeowners 3,074 notices of default during the first quarter of 2008, up 190 percent from the same period a year ago. Speaking to Silicon Valley Realtors in neighboring Palo Alto last week, Santa Clara County Assessor Larry Stone said so far, his office has lowered the values of 41,231 homes, but noted, "It may be closer to 45,000 by the time we are done."

Stone acknowledged there are parts of Santa Clara County that are experiencing difficult times, but specifically mentioned, "The markets in Palo Alto, Los Gatos, Saratoga, Los Altos, and to a lesser extent, Sunnyvale, have been holding up pretty good."

He noted the sale of high-end homes continues to do well, but low and middle-line homes especially in Milpitas, Morgan Hill, Gilroy and San Jose are stressed.

Data Quick reports of the homeowners in default, an estimated 32 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was about 52 percent were able to do this.

Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 47,171 during the first quarter. Last quarter's total rose 48.9 percent from 31,676 in the previous quarter, and jumped 327.6 percent from 11,032 in first quarter 2007. In the last real estate cycle, Trustees Deeds peaked at 15,418 in third-quarter 1996. The all-time low was 637 in the second quarter of 2005.

There are 7.9 million houses and condos in the state, DataQuick reported.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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