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Special Reports - Real Estate

Wednesday, Jun. 17, 2009

Valley foreclosures keep rising

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Foreclosures continue to mount throughout the Northern San Joaquin Valley.

About 40,000 homes have been foreclosed in Stanislaus, San Joaquin and Merced counties since January 2007, costing lenders more than $16 billion in unpaid mortgages.

That includes May foreclosures that claimed 614 homes in Stanislaus, 330 in Merced and 693 in San Joaquin, according to statistics released Tuesday by ForeclosureRadar.

May was among the most brutal foreclosure months yet. And it looks like things might get worse before they get better because there was a spike in the number of "notice of trustee sale" filings in May. Those notices are the final warning that homeowners get before their homes are sold on the courthouse steps.

During May, 1,054 homeowners in Stanislaus got that final notice, along with 556 in Merced and 1,378 in San Joaquin. If those homeowners don't catch up on their unpaid debts or convince lenders to modify their mortgages, their houses could be repossessed within a month.

"While many complain that lenders are foreclosing too aggressively, and others claim a wave of foreclosures sales is imminent, the data actually shows that lenders are doing everything possible to delay foreclosure," said Sean O'Toole, ForeclosureRadar's chief executive officer. "The reality is that we have very few homeowners being foreclosed on when viewed as a percentage of those scheduled to be foreclosed on, in default, delinquent, or upside down in their mortgage."

O'Toole said the California Foreclosure Prevention Act, which went into effect this week, won't help much. That new law puts a 90-day moratorium on foreclosures for lenders that haven't created a comprehensive loan-modification program.

"Most major lenders are going to be exempt" from that delay because they have prepared modification programs, O'Toole said. "So the chances are pretty low that many people are going to get an extra 90 days."

Even when lenders have loan-modification programs, it doesn't mean most homeowners can work out deals to save their homes, warned Martha Lucey, who runs a nonprofit counseling agency.

"In too many cases, foreclosure moratoriums just forestall the inevitable," said Lucey, president of ClearPoint Credit Counseling Solutions' Pacific region.

Lucey said many Northern San Joaquin Valley homeowners are delinquent on their mortgages because they have lost their jobs and their homes are worth less than what they owe. If they can't sell their homes to cover their debt and they can't find a job, Lucey said they can't qualify for a loan modification.

"For many families, the math just doesn't work," Lucey said.

Bee staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or 578-2196.