Sonoma County foreclosures remain high; defaults decline

<p>The rapid pace of people losing their homes to foreclosure in Sonoma County continued through the first half of this year, according to housing data released Wednesday.</p><p>Lenders seized nearly 1,000 homes in the county through July, according to MDA DataQuick of San Diego. That is up about 10 percent compared to the same period last year.</p><p>The data did provide a glimmer of hope. Lenders sent fewer notices warning homeowners they had fallen behind on their mortgage payments, which could be an early indicator that the pace of foreclosures could ease in the near future.</p><p>The number of default notices, which is the first public step a lender takes towards foreclosing on a home, dropped about 30 percent compared to last year. Lenders issued 1,858 default notices during the first six months, compared to 2,611 last year.</p><p>But some real estate professionals questioned Wednesday whether the drop in notices is the result of homeowners making their payments, or of the increasingly murky waters surrounding the foreclosure process.</p><p>“It's really hard to figure out what the real numbers are on a lot of this,” said Doug Solwick, a broker associate with Keller Williams Realty in Santa Rosa. “There are so many mixed messages out there.”</p><p>Lenders are not required to file a notice when a homeowner falls behind on payments. While banks in the past filed a default notice when a homeowner fell 90 days behind on their payments, the surge in mortgage problems that began in 2007 has drastically changed how some lenders are handling late payments.</p><p>“I just heard about two people who haven't made a payment in a year and the banks still haven't filed a (notice of default) on them,” said James Madison, an agent with Coldwell Banker in Santa Rosa and one of the county's top sellers of distressed properties.</p><p>Lenders might not file a notice because they are hoping the homeowner can qualify for a loan modification or that the borrower will sell the house and repay the bank whatever it sells for — known as a short sale because the bank only recoups part of its loan.</p><p>“Obviously, motivated sellers and accommodating lenders have played a part in bringing the default filings down, especially when it comes to short sales,” said John Walsh, DataQuick president.</p><p>On the other hand, some lenders might be so overwhelmed that they've fallen behind on issuing notices. The average time it takes lenders to foreclose on a home has increased nearly 50 percent, from 6.4 months a year ago to 9.1 months at the end of June.</p><p>The number of properties sold at foreclosure auction to a third party, rather than having the lender take ownership, also increased year over year. </p><p>Neither Madison nor Solwick believe the real estate market will improve anytime soon.</p><p>“I see a lot of people struggling out there,” Solwick said. “Until the job market gets better, I just don't see things improving.”</p><p>Statewide the number of foreclosures increased 4.4 percent in the second quarter of 2010 compared to the same three-month period last year. Default notices dropped decreased 43.8 percent statewide.</p>