Sonoma County home foreclosures fell this spring to their lowest level in six years, a drop attributed partly to new state rules and to rising home prices.
County homeowners lost 128 homes to foreclosure in the second quarter, according to San Diego-based information service DataQuick. That was the lowest number since 94 foreclosures were recorded in the first quarter of 2007.
The number of homes entering the foreclosure process rose this spring, but it still amounted to the second-lowest total for any quarter in nearly seven years.
In the second quarter, county homeowners received 286 default notices, the first official step in the foreclosure process. That total compared with 194 in the first quarter and 680 a year ago.
For January through June, the county has recorded 480 default notices, the lowest total since 359 occurred in the first half of 2006.
Real estate agents suggested the big wave of foreclosures has finally subsided.
"It will probably just get smaller and smaller," said James Madison, an agent with Coldwell Banker in Santa Rosa who specializes in foreclosure resales.
Lenders, he said, are trying to do more loan modifications rather than use the foreclosure process. Rising home prices have encouraged that approach, as have new laws protecting those at risk of foreclosure.
Mortgage defaults plummeted statewide early this year when a package of new foreclosure laws known as the "Homeowner Bill of Rights" took effect in California. Analysts said foreclosure activity in different states similarly has dropped for brief periods while the lending industry took time to adjust to new rules.
But the drop in foreclosure activity also appears tied partly to rising sales prices. In Sonoma County, the median price for a single-family home reached $439,000 in June, an increase of 26.2 percent from a year earlier.
"A foreclosure only makes sense when the home is worth less than what is owed on it," said John Walsh, DataQuick president. "As home values rise, fewer homeowners owe more on their homes than the homes are worth."
Foreclosures peaked in Sonoma County in 2008, when 2,800 homes were taken back by banks or sold to third parties at auction. But foreclosures have been falling for four straight years, and last year dropped sharply to slightly more than 1,200.
Since 2007, nearly 11,000 county homeowners have lost houses and condominiums in foreclosures — roughly 1 in every 10 homes here with a mortgage.
With the drop in activity, those real estate agents who previously had specialized in foreclosure resales have scaled back or sought other types of clients.
"I'm back to doing regular real estate," said Charles Himes, an agent with Pacific Union International Real Estate and the Santa Rosa office's director of REO Services. REO, or real estate owned, refers to properties that banks have acquired through foreclosure.
Even with the drop in foreclosures, many homeowners still owe more on their mortgages than the homes are worth. In the first quarter, an estimated 20 percent of county homeowners with mortgages were underwater, according to information service CoreLogic.
And rising prices will have a limited impact on many distressed owners. PropertyRadar of Truckee, formerly ForeclosureRadar, estimated last month that even if home prices rose another 20 percent, 1.6 million California homeowners would still be underwater. That amounts to more than 15 percent of all homes with mortgages.