Mortgage defaults have dropped for a year straight across the Sacramento region - and foreclosures are following suit.
But it's hard to argue that the loan crisis is easing.
The number of defaults and foreclosures is declining even as trouble stalks more loans than ever - one in eight now - amid state employee furloughs and 13.1 percent unemployment across the Sacramento region.
Analysts say the oddity reflects changes in how banks are dealing with the crisis, and how government barricades to foreclosures are steadily slowing them down.
Whatever the reason, some experts believe the worst is over - at least in the short term - and no massive new wave of repos further threatens home values.
"If you think that wave is coming, we don't see signs of that yet," said Andrew LePage, analyst for MDA DataQuick.
Tuesday, DataQuick reported 4,331 new foreclosures during the first three months of 2010 in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That was down from two previous quarters where foreclosures exceeded 5,000.
Quarterly Sacramento-area foreclosures peaked at 7,769 in July, August and September 2008 as banks ramped up their repo machinery for thousands of defaulting subprime borrowers. The pace slowed soon afterward as the resulting flood of bank repos caused a severe crash in home prices.
"It doesn't serve anyone's purpose to push a home to foreclosure as fast as you can," said Dustin Hobbs, spokesman for the California Mortgage Bankers Association. He called the new quarterly pace "a sign that lenders have wised up to the situation."
Even with fewer houses going back to lenders every month, Sacramento's housing crisis remains so profound that the market ranks third in the United States for its percentage of "distress sales," according to First American CoreLogic. The firm said 58 percent of January sales in Sacramento, Yolo, Placer and El Dorado counties were foreclosure properties or short sales, in which banks take less than owed. Only the Riverside-San Bernardino and Las Vegas metro areas were worse.
Altogether, 56,319 houses have been foreclosed on in the eight-county capital region since the start of 2007. Statewide, the foreclosure tally is nearly 700,000 since the mortgage crisis began that year.
A slower 2010 pace is little comfort to borrowers like Sara Avila, a state employee who lost a Sacramento investment property last month.
She hired two lawyers and tried to get a loan modification for more than a year. Her lender balked at modifying the loan, then at accepting a $140,000 short-sale offer that was less than it was owed. The lender, Aurora Loan Services, has since listed the foreclosed home for $134,900, she said.
"It was just a really horrible, horrible experience," she said Tuesday. "Oh my Lord, I couldn't begin to tell you how many times I had to resubmit a financial hardship letter, all my assets and then my wage statements and my taxes."
DataQuick said the 2010 drop in foreclosures follows four consecutive quarters of falling mortgage defaults in the Sacramento region. The firm counted 7,222 default notices filed by lenders during the first quarter. That tally was far below 11,049 a year earlier, when lenders aggressively restarted collection efforts after moratoriums and new laws.
Defaults are the first formal foreclosure warnings issued by lenders when homeowners fall three or more months behind on payments. Today, more people are avoiding default for far longer as lenders try loan modifications and short sales.
DataQuick reported that lenders also take longer now - nearly eight months - to foreclose after a default notice.
"We're in this period where lenders are increasingly choosing other paths before and after entering the formal foreclosure process," said LePage.
Among those paths, short sales have grown to nearly one in four sales of existing homes in Sacramento County and the city of West Sacramento, according to the Sacramento Association of Realtors.
"There's more of them closing, and they're closing faster," said Elizabeth Weintraub, a Sacramento broker associate with Lyon Real Estate. But they aren't getting easier.
"They're getting more complicated. First off, there's a lot of crooks. They're finding a lot of profit in short sales and jumping into the game," she said. "The seconds (junior lienholders) are making outrageous demands. And the first lenders are wising up. They counteroffer. On a $200,000 property they might ask for an extra $10,000. If they get 10 percent of that, they're happy."
The state Department of Real Estate has issued new consumer alerts about people fraudulently offering services as short sale negotiators.
Weintraub said many Sacramento short sales involve homeowners who couldn't get loan modifications.
As April began, lenders had permanently modified just 3,882 Sacramento-area mortgages under the Obama administration's Making Home Affordable plan, the U.S. Treasury Department said. Nationally, they have permanently modified 227,992 mortgages since it began a year ago.
--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.