Foreclosures inched up slightly across the capital region in the last three months of 2009, but loan defaults fell for a third straight quarter as lenders focused more on finding alternatives to taking the keys, La Jolla-based MDA DataQuick reported Wednesday.
The newest statistics revealed a still-painfully fragile housing market beset by widespread distress but also beginning to emerge from the subprime meltdown.
"We're moving from a lender-created mess to an economy-created mess," said Stuart Feldstein, president of lending industry tracker SMR Research in New Jersey. "The nature of the beast has changed. That doesn't mean it's better, but it's more curable."
- DataQuick counted 5,081 fourth quarter 2009 foreclosures in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. The third-quarter count was 5,004 foreclosures.
- Fourth-quarter capital-area defaults numbered 7,522. That was down from 9,751 in the third quarter. Regionally, foreclosures peaked at 7,769 in the third quarter of 2008. Area defaults crested at 11,049 the first quarter of 2009.
The trend was repeated on a larger scale statewide. The sustained decline in defaults led DataQuick to suggest the worst may be over in hard-hit entry-level markets that dominate inland areas of California. Feldstein concurred, saying, "The good news, often overlooked, is (that) the truly horrible risks of people who shouldn't have gotten loans in the first place are running off at a fairly rapid rate."
But DataQuick analysts also noted that the recession is spreading the mortgage crisis to more expensive neighborhoods. Owners there, many with prime fixed-rate loans, are struggling with wage cuts, state employee furloughs and a 12.4 percent unemployment rate that may keep rising.
Wednesday, DataQuick reported that most of the loans experiencing trouble at the end of 2009 were originated in early 2007. Many also date back to mid-2006, "the worst of the 'loans gone wild' period," the company said.
Lenders with the highest numbers of problem loans statewide included Countrywide (now an affiliate of Bank of America), Wells Fargo and Washington Mutual (now an affiliate of JPMorgan Chase). Along with Bank of America and World Savings, all were the most active lenders in the second half of 2006, DataQuick said.
Today, many of those lenders have become slower to proceed with foreclosures.
"Our take is that lenders are increasingly willing to work with borrowers before a notice of default is filed," DataQuick Analyst Andrew LePage said.
Other options include loan modifications or the short sales that are becoming more common, according to the Sacramento Association of Realtors. Short sales - in which lenders accept sale prices below what they're owed - accounted for one in four December sales in Sacramento County and West Sacramento, said SAR.
Elk Grove-based Century 21 real estate agent Derek Kirk said more than half the for-sale signs in the suburban city are tied to short-sale listings.
"I believe lenders are getting pressure to make it easier," he said. "They are doing more of them, and I think some of the banks are now trying to streamline and implement better procedures so they can make quicker decisions.
"Waiting 90 to 120 days is not realistic for buyers."
--Call The Sacramento Bee's Jim Wasserman, (916) 321-1102 or email him at [email protected]. Read his blog on real estate, Home Front, at www.sacbee.com/blogs.