By Peter Hong, Staff Writer Los Angeles Times 11:57 AM PDT, October 26, 2007
Californians lost their homes in record numbers for a second straight quarter, figures released today show.
Foreclosures statewide were at an all-time high for the three months ended Sept. 30, after shattering a record level the previous quarter, the La Jolla firm DataQuick Information Services said.
Though the state's foreclosure rate tops that of the 1990s real estate collapse, Los Angeles and Orange counties have fared better so far. Neither county has slipped to the foreclosure levels of the 1990s, although each saw a sharp increase from the previous quarter.
Third-quarter foreclosures statewide totaled 24,409, up nearly 40% from the second quarter. In the six Southern California counties of Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura, there were 13,314 foreclosures, up from 1,960 in the third quarter of last year.
In addition, 41,062 homeowners said they had received notices that they were in default on their loans -- a first step toward foreclosure. About half such homeowners typically escape foreclosure by bringing their payments current, selling their homes or refinancing, according to DataQuick.
Nonetheless, foreclosures are expected to continue to rise as large numbers of variable-rate mortgages reset to higher rates in the next year, leaving homeowners with higher payments than they can afford. That could flood the real estate market with discounted, bank-owned homes -- possibly stalling a recovery for several years, some analysts say.
Even if the Federal Reserve continues cutting interest rates, "it's still going to be shocking," said Edward E. Leamer, director of UCLA's Anderson Forecast.
Lower interest rates and easier terms offered by lenders may help some borrowers, but probably not enough to make up for the huge payment increases faced by borrowers who took mortgages with artificially low teaser rates.
The foreclosure wave had been largely confined to the Inland Empire, but the third-quarter figures show it creeping into Los Angeles and Orange counties.
Default notices set a state record at 72,571, eclipsing the previous mark of 61,541 set in the first quarter of 1996.
In Los Angeles County, 13,583 notices of default were issued, and Orange County recorded 3,882. In both counties, the total was about 1 ½ times the previous year's figures.
Steve DeVre, a real estate broker in southern Orange County, shifted the focus of his business to foreclosure work in the last year. "I've been barraged in the last 30 days" by foreclosure business, he said.
Much of his time now is spent working for banks, evaluating the value of homes on the verge of foreclosure.
DeVre said most of the properties he'd has been eyeing so far were recently built condominium units and recently purchased houses in less glamorous inland neighborhoods. He said he had yet to see many foreclosures in the high-end coastal communities.
"It's all east of the [I-5] freeway at this point," DeVre said.
http://www.latimes.com/business/la-fi-foreclose27oct27,0,5892547.story?coll= la-home-center
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