California homes entering foreclosure hit record

Sinking home values and the collapse of flimsy mortgages sent a record number of California homes into the foreclosure process in the first three months of this year, a real estate information service reported today.

Default notices – the first stage of foreclosure – were sent to owners of 110,000 California homes from January to March, about 1% of the homes in the state, according to La Jolla-based DataQuick Information Systems. Default notices were up 143% from the same quarter a year ago.

Most California homeowners in default are now eventually forfeiting their properties to lenders. Only about 32% of those receiving default notices prevent foreclosure by refinancing or selling their property to pay off their mortgages, DataQuick reported. A year ago, 52% of those in default were able to avoid foreclosure.

The higher percentage of homes in default that end up foreclosed now reflects the slow real estate market as well as the number of homes bought at the height of the market with multiple loans, which makes workouts with lenders more difficult, DataQuick said.

DataQuick President Marshall Prentice said that if the economy is in recession, “the foreclosure problem could spread beyond the current categories of dicey mortgages and into mainstream home loans.”

The number of homes actually repossessed in California totaled 47,171 during the first quarter, more than four times the 11,032 homes foreclosed in the first three months of 2007.

In Southern California, 25,024 homes were repossessed in the first quarter this year, up 316.7% from the same quarter a year ago.

The National Assn. of Realtors also reported today that home prices fell 7.7% in March from a year ago, to $207,000. Home sales nationwide dropped 19% in March from a year ago, the NAR said.

Further house price declines are possible, an influential economist said. Yale economist Robert Shiller, who developed the widely cited Standard and Poors/Case-Shiller home price index, said in a New Haven, Conn., speech that home prices could fall by more than 30% from their peak, exceeding the drop of the 1930s Great Depression. So far, nationwide home prices are down 18% from their 2006 peak, according to the Case-Shiller index.

peter.hong@latimes.com

The Associated Press contributed to this report