Foreclosure activity rises dramatically / Bay Area defaults, auctions, repossessions nearly triple; nationwide notices are up 87%

Foreclosures continued to rise throughout the country, the state and the Bay Area in June, according to a report to be released today. Nationally, 164,644 foreclosure notices were filed in June, up 87 percent from June of last year, said RealtyTrac.com, an online marketplace for foreclosure properties. In the Bay Area, the number of foreclosure notices was 5,018, almost triple the 1,780 in June 2006.

"The big variable driving the numbers is the much higher-than-anticipated rate of default of subprime loans," said Rick Sharga, vice president of RealtyTrac in Irvine. Subprime loans, which grew in popularity in the past two years, are loans to people with tarnished credit, as well as loans for 100 percent financing.

"The excessive and lax lending practices of the past couple of years of the real estate boom are coming home to roost," Sharga said.

Such notices encompass three stages of foreclosure: default notices, which occur after a homeowner has missed payments; notices of trustee sales, which mean a foreclosure auction has been scheduled; and bank repossession, which means the property has reverted to the lender. Not all default notices result in foreclosures, but they are an early warning sign that homeowners are in trouble.

In the nine-county Bay Area, 3,383 households received default notices in June, more than double the 1,460 in June 2006. Alameda and Contra Costa had the highest number, with slightly more than 1,000 such notices each, followed by Solano with 557 default notices.

Notices of trustee sales in the nine counties hit 1,011 in June, more than triple the 281 filed the previous June. Again, Alameda, Contra Costa and Solano counties had the most such notices.

There were 624 Bay Area bank repossessions in June, a dramatic increase from 39 the previous June.

Comparing the total of all three types of foreclosure notices with each county's number of households showed that Solano had the most foreclosure activity relative to its size, with 1 foreclosure notice for every 149 households.

Contra Costa County had 1 foreclosure notice for every 198 households, while Alameda County had 1 notice for every 440 households. At the other end of the spectrum, Marin County had 1 foreclosure notice for every 2,625 households, while San Francisco had 1 such notice for every 2,179 households.

Sharga said foreclosure activity this year has accelerated much faster than RealtyTrac anticipated. While it originally forecast that the nation would see about 1.4 million to 1.5 million foreclosure notices in 2007, "Right now, if we run at a flat rate, it will be 1.8 million filings and 2 million isn't out of the question," he said.

California had the second-highest foreclosure rate in the country after Nevada, with 1 filing for every 315 households. State residents received 27,483 default notices and 7,082 notices of trustee sales, and had 4,236 homes repossessed by banks.

California also had the dubious distinction of accounting for six of the nation's top 10 metropolitan areas with the most foreclosure activity per number of households. Stockton, Merced, Modesto and Riverside-San Bernardino were Nos. 1 through 4 on the list. Vallejo-Fairfield was No. 7 and Sacramento was No. 8. Las Vegas was No. 5; Greeley, Colo., was No. 6; Detroit was No. 9 and Miami was No. 10.

While not all notices of default result in a foreclosure, Sharga said their rapid rise can still have a material effect on the real estate market. As the number of properties in such a situation increases, banks are more likely to allow the homes to be sold at a loss in a process called a short sale, or to be sold in a foreclosure auction, also at a lower value. That in turn will depress values of nearby homes.

"That has an insidious effect across the state," Sharga said. If one thinks of default notices as the canary in the coal mine, "The canary has wheezed and gasped and is probably being carried out right now," he said.

of the top 10 metro areas with the most foreclosure activity were in California.

39

Number of Bay Area bank repossessions June 2006.

624

Number of Bay Area bank repossessions June 2007.

315

Number of California homes per foreclosure filing, second in the nation.

87%

Increase in foreclosure filings nationally in the past year.

Foreclosure activity rises The Bay Area saw a significant increase in foreclosure notices in June compared with June 2006. The types of activity tracked are notices of default, which indicate that a homeowner is behind on the mortgage; notices of trustee sale, which indicate that a bank has scheduled a foreclosure auction; and REOs, or real estate owned by banks, which indicate that a house has been repossessed by the lender. County / Notices of Notices of Month default trustee sale REOs Totals Alameda JUNE '07 1,048 150 29 1,227 JUNE '06 352 74 14 440 Contra Costa JUNE '07 1,046 408 341 1,795 JUNE '06 381 70 9 460 Marin JUNE '07 31 6 3 40 JUNE '06 19 4 0 23 Napa JUNE '07 38 10 3 51 JUNE '06 8 2 0 10 San Francisco JUNE '07 105 49 5 159 JUNE '06 60 14 1 75 San Mateo JUNE '07 93 40 17 150 JUNE '06 112 10 2 124 Santa Clara JUNE '07 334 90 78 502 JUNE '06 284 53 6 343 Solano JUNE '07 557 216 132 905 JUNE '06 198 44 2 244 Sonoma JUNE '07 131 42 16 189 JUNE '06 46 10 5 61 Bay Area total JUNE '07 3,383 1,011 624 5,018 JUNE '06 1,460 281 39 1,780 Source: RealtyTrac.com The Chronicle