Real Estate

Foreclosures' furious pace

About $925 million worth of mortgages have been foreclosed on since January in the Northern San Joaquin Valley, and 2,575 homes have been auctioned off on courthouse steps in Stanislaus, San Joaquin and Merced counties.

During June alone, there were 203 home foreclosure auctions in Modesto at which lenders tried to recover what they could from $66 million in delinquent loans, according to the ForeclosureRadar research firm.

By comparison, only 15 such home auctions took place in June 2006, and those loans were worth just $4 million, said Sean O'Toole, who owns ForeclosureRadar, a research firm based in Discovery Bay.

O'Toole has been tracking the rapid rise in foreclosures throughout California. Statewide last month, he said, there were foreclosure auctions for 6,960 homes with loan values of $2.83 billion.

"Foreclosure sales now represent about 16 percent of all home sales in California," O'Toole said.

At the vast majority of foreclosure auctions, no one bids against the lender to buy the property. So the lender gets the house for the price of its outstanding debt, which may be more than the home is worth.

Lenders were the lone bidder at 94 percent of the auctions statewide in June, according to ForeclosureRadar's statistics.

"Lenders are building a significant inventory (of repossessed homes)," O'Toole said. "Since Jan. 1, 2007, a total of 29,696 California properties have been returned to the lender for an astonishing total loan value of $12 billion. This is unprecedented."

The situation may get worse before it gets better.

RealtyTrac, another foreclosure property research firm, calculated there were 38,801 foreclosure filings in California during June, which included mortgage default notices, auction sale notices and bank repossessions.

That was a drop of about 10 percent compared with May. But compared with June 2006, this June there were nearly four times more foreclosure filings.

The Northern San Joaquin Valley leads the nation when it comes to mortgage defaults, according to RealtyTrac.

Of all U.S. metropolitan areas, RealtyTrac calculated that San Joaquin County had the highest rate of homes in the process of being foreclosed, 1 in 103.

Merced County ranked second worst, with 1 in 121 homes in the foreclosure process.

And Stanislaus County ranked fourth worst, with 1 in 131 homes.

For California as a whole, 1 in 315 homes was in the foreclosure process.

The nationwide rate was 1 in 704 homes.

Traditionally, most homeowners who receive notices of default have been able to refinance their mortgages, catch up on payments or sell their houses before lenders force an auction.

But as home prices fall, mortgage lending requirements tighten and loan interest rates rise, avoiding foreclosure has become more difficult.

Bee staff writer J.N. Sbranti can be reached at or 578-2196.