Simply astounding foreclosure stats in California

DataQuick reported record foreclosure activity in California through the third quarter - the numbers are astounding.

Almost as important as the shocking number of homes that are now entering the foreclosure process is the dwindling percentage of homes that are emerging from the process with the homeowner keeping their house.

For years, with an ever increasing number of Notices of Default (i.e., the formal filing of paperwork when the borrower first falls behind in their payments), homeowners have been able to somehow refinance their loan, bring their payments current, or sell the property in order to square things with their lender.

These "workout" rates were typically 90 to 95 percent and were at a comfortable level of 81 percent just one year ago.

The rate for the third quarter was an astonishing 46 percent and will probably continue to fall along with home prices.

A few more details from the DataQuick report:

Last quarter's default level passed the previous peak of 61,541 reached in first-quarter 1996. A low of 12,417 was reached in third-quarter 2004. An average of 34,781 NoDs have been filed quarterly since 1992, when DataQuick's NoD statistics begin.

"We know now, in emerging detail, that a lot of these loans shouldn't have been made. The issue is whether the real estate market and the economy will digest these over the next year or two, or if housing market distress will bring the economy to its knees. Right now, most California neighborhoods do not have much of a foreclosure problem. But where there is a problem, it's getting nasty," said Marshall Prentice, DataQuick's president.

Half the state's default activity is concentrated in 293 zip codes, almost all of which are in the Inland Empire and Central Valley. Grouped together, those zip codes saw year-over-year home price increases that reached 34.0 percent in first quarter 2005. Prices peaked in third-quarter 2006 at $399,000. Last quarter's median of $352,250 is 11.7 percent off that peak.

And for the historical perspective, Calculated Risk has this handy chart:
Simply astounding and, as CR himself says, "It's hard to imagine, but next year will probably be worse."