Foreclosure activity in Sonoma County remains at its lowest level in nearly five years, even as short sales have risen to become the primary way to dispose of financially distressed homes.
Lenders in the third quarter sent county homeowners 597 notices of the default, the first step in the foreclosure process, according to DataQuick, a San Diego-based real estate information service. The number decreased 33 percent from a year earlier and was the lowest since 462 mortgage defaults were recorded in the second quarter of 2007.
Homeowners lost 304 houses and condominiums in foreclosure during the third quarter, a decline of 38 percent from a year earlier. The figure was higher than the 258 foreclosures from the previous quarter, but still lower than any other quarter since the end of 2007.
DataQuick reported a similar trend for the state, and analysts suggested one reason was the rise in short sales, where the price paid for the home is less than the amount owed on mortgage.
"We've seen short sales overtake the foreclosure process as the procedure of choice to deal with homeowner distress," DataQuick President John Walsh said in a statement.
The county has seen the same shift. A year ago, sales of foreclosure properties seized by lenders outnumbered short sales. But earlier this year the order began to reverse and since has shifted dramatically.
In the third quarter the county recorded 316 short sales, compared to 165 foreclosure resales, according to The Press Democrat's monthly housing report.
In parts of the state, the total number of distressed sales is about the same as a year ago, said Sean O'Toole, CEO of ForeclosureRadar, a Discovery Bay company that tracks foreclosure data. The only difference is that now more of the transactions involve short sales than foreclosures.
However, in Sonoma County the total number of distressed sales declined 11 percent in the third quarter, compared to a year earlier.
O'Toole predicted that in the coming months, banks won't greatly increase how quickly they process short sales and foreclosures to deal with homeowners behind on their mortgage payments.