Mortgage defaults dip in Sonoma County

<p>Mortgage defaults have dipped to their lowest level in two years in Sonoma County but foreclosures show no signs of receding, a real estate database firm reported Tuesday.</p><p>The report, by San Diego-based DataQuick, provided mixed signals about the next stage of the county's 4-year-old foreclosure crisis.</p><p>Every week, about 40 borrowers in Sonoma County continue to lose their homes. Lenders seized 519 homes in Sonoma County during the first quarter, up 17 percent from the previous quarter and 5 percent from a year ago.</p><p>The worst of the crisis appears to have passed, said John Duran, president of the North Bay Association of Realtors' Santa Rosa Chapter, citing foreclosure experts who spoke at a recent statewide conference. But it may not yield significant declines in foreclosures anytime soon.</p><p>“They feel like we're banging along in the trough,” said Duran, a broker with Frank Howard Allen.</p><p>Default notices — the first step in the foreclosure process — sank to their lowest level since the end of 2008, DataQuick reported. In the first quarter, lenders issued 864 default notices to Sonoma County borrowers who fell behind on their mortgages, down 2 percent from the previous quarter and 8 percent from a year earlier.</p><p>Despite the decline, many homeowners are still at risk of losing their homes, Duran said.</p><p>“It's going to be a two- to five-year process to bleed all these properties into the market,” Duran predicted.</p><p>Foreclosures began to soar in Sonoma County in 2007. That year borrowers lost 756 homes, compared to about 50 annually during the previous seven years.</p><p>The worst year was 2008, when a record 2,820 homes were lost at foreclosure auctions. For the last three years, the quarterly number has never dipped below 420.</p><p>The surge in foreclosures and other distressed properties are blamed for lowering home values and for severely depressing new home construction. Builders say they can't sell new houses for as little as the current prices of the foreclosure properties.</p><p>The mixed signs in Sonoma County were also present in other parts of the state. Across California, lenders foreclosed on 43,052 homes during the first quarter, up nearly 22 percent from the prior quarter and essentially unchanged from a year ago. The record was 79,511 set in third quarter of 2008.</p><p>But mortgage defaults declined, reaching their lowest level in almost four years. Lenders sent 68,239 default notices, down 2 percent from the last quarter and down almost 16 percent from a year earlier.</p><p>“Lenders and servicers have put various temporary holds on foreclosure filings while they work on procedural issues and respond to regulatory and legal challenges,” said John Walsh, DataQuick president. “It's unclear how much of last quarter's decline can be attributed to market factors and strategic decisions, and how much can be attributed to the formalities of the foreclosure process.”</p><p>By the time the default notice was filed, the typical homeowner in California already was six months behind on payments and owed almost $16,000 on a loan of more than $320,000.</p><p>After filing that notice, lenders on average took 9.1 months to complete the process with the foreclosure auction. That time period compared with 7.5 months a year ago.</p><p>“I think the regulatory process is slowing things down,” said Terriann McGowan, broker/owner of Admiral Asset Management in Rohnert Park.</p><p>The delays, she said, relate both to new laws requiring lenders to give homeowners adequate notice and opportunities to save their homes, as well as state and federal inquiries into allegations that banks had failed to adhere to existing rules when processing the foreclosures.</p><p>James Madison, a Coldwell Banker agent who specializes in foreclosures, said banks have shown they intend to continue “a nice steady release” of foreclosures rather than flood the market. As such, he estimated it will take another four to five years before the number of foreclosures drops significantly.</p><p>“I don't see that much really changing,” Madison said.</p>