Real Estate

17,000 valley homes seized as foreclosures continue to skyrocket

Many homes in the valley, such as this one on Mable Avenue in northeast Modesto, have been foreclosed on in the past year. Ted Benson/The Modesto Bee
Many homes in the valley, such as this one on Mable Avenue in northeast Modesto, have been foreclosed on in the past year. Ted Benson/The Modesto Bee The Modesto Bee

More than 17,000 Northern San Joaquin Valley homes have been lost to foreclosure during the past year, data released Tuesday shows.

The number of homes repossessed by lenders continues to skyrocket in Stanislaus, San Joaquin and Merced counties, according to DataQuick Information Systems.

This April, May and June, for instance, 2,207 homes were foreclosed on in Stanislaus, pushing the county's one-year total to 5,554.

That means about 1 in 25 Stanislaus homes were lost to foreclosure from July 2007 through June.

Statewide, 1 in 52 homes were taken back by lenders during those 12 months. California lost 63,031 homes to foreclosure this spring and 166,087 during the past year.

San Joaquin and Merced have the highest foreclosure rates in the United States.

In San Joaquin, 3,185 homeowners lost their property to foreclosure this spring, pushing its one-year total to 8,366. That means 1 in 21 San Joaquin homes have been foreclosed since July 2007.

In Merced, 1,223 homes were foreclosed this spring, pushing its one-year total to 3,174. That means 1 in 20.5 Merced homes were lost.

"Areas that absorbed spillover activity during the end of the boom cycle in 2006 seem to be the hardest hit. Prices went too high, fueled by the availability of easy-to-get, dicey home loans. An added element was speculative buying," said John Walsh, DataQuick president.

The foreclosure problems aren't likely to end soon, judging by the increasing number of homeowners who fell into mortgage default this spring.

A record number of "notices of default" were filed in almost all of California's 58 counties this spring, including Stanislaus, San Joaquin and Merced.

Notices of default are the first legal step in the foreclosure process. It takes at least four months after homeowners receive that notice before their homes can be foreclosed on. Often, that process takes more than six months.

So the record number of defaults this spring suggests that new foreclosure records will be set this fall.

There were 3,464 default notices in Stanislaus this spring, 4,795 in San Joaquin and 1,936 in Merced. Statewide, 121,341 notices were filed.

Most of the loans that went into default statewide this spring originated from September 2005 to November 2006.

The median for California homeowners who were behind on their payments when their lender filed the notice of default was five months. The borrowers were behind a median $11,583 on a median $346,400 mortgage. Median means half were above, half below.

DataQuick estimates that 22 percent of homeowners in default will emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying what they owe.

A year ago, about 52 percent of homeowners in default saved their homes. According to DataQuick, the increased percentage of homes lost to foreclosure reflects the slow real estate market, as well as the number of homes bought during the height of the market with multiple loans, which makes workouts, or loan modifications, difficult.

After lenders foreclose on homes, they must try to find new buyers. They typically offer the homes at bargain prices, which has caused dramatic drops in median home sales prices.

DataQuick calculated that 40 percent of California homes sold this spring (not counting new houses) were former foreclosures. Foreclosure resales vary significantly by area, from 3 percent in San Francisco County to 75.1 percent in Merced County.

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

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