Foreclosures on Homes Hit Record High Last Year : Real estate: Some analysts, however, are predicting that repossessions by lenders will decline in 1995.
This is one way a working couple lost their home:
They plunked down a $29,000 down payment on a $290,000 Channel Islands home in 1989. Just five years later, the home is barely worth $200,000 and is losing value every year.
But it became fruitless to continue making payments on a home in which they had no equity and that had become a financial sinkhole. They decided to stop making payments and walk away.
“They are making huge payments and struggling, so they decide to walk,” said a Ventura real estate agent who sold the couple’s house. “They got eaten up.”
And the couple is not alone. A record number of Ventura County residents lost their homes through foreclosure last year.
According to analysts, 1,654 Ventura properties were repossessed by lenders in 1994, exceeding the previous high of 1,635 the year before.
Typically, about 85% of the foreclosures are residential properties, TRW-REDI economist Nima Nattagh said.
“Foreclosures are lagging economic indicators,” Nattagh said, adding that he sees some good news in the numbers.
The rate of increase last year--about 1.2%--is the lowest since the collapse of the regional real estate market began in late 1989. That suggests that fewer foreclosures will occur this year, Nattagh said.
In fact, lenders served default notices on 2,549 county homeowners last year, a drop of almost 18% from 1993, according to Dataquick Information Systems.
The default notice is the first step in a foreclosure.
“The pipeline isn’t being filled,” said Brian J. Back, a real estate attorney based in Thousand Oaks. “The system is being flushed.”
While continuing to work on numerous foreclosure cases, Back is starting to handle more “good transactions” than in any of the last five years.
“We are pretty optimistic,” he said.
Still, just five years ago, Ventura County foreclosures were a tiny fraction of what they are today. Only 215 homes were lost to lenders in 1990. And for homeowners holding foreclosure notices, the promise of better times comes too late.
Many bought their homes at the height of the real estate boom five years ago and now find their properties dramatically devalued.
“We are really seeing people walk away from high-end homes,” said Don Nelson, of Foreclosure List Service in Ventura.
And panicky bank officials are not as lenient as they used to be when it comes to foreclosure, because tighter government regulations have taken away a lender’s flexibility.
“It’s funny,” Back said. “There’s some real leniency until your case hits the top of the pile and then the lender really digs his heels in.”
Analysts said the high volume of foreclosures continues to reflect the region’s loss of high-paying jobs in aerospace and other high-tech industries. Even though the rate of job losses in 1994 slowed, foreclosures continue to pile up because banks can take up to a year before repossessing a property after payments have stopped.
In the meantime, the soaring number of foreclosures has helped drag down the region’s housing market. With banks selling foreclosed properties at deep discounts, prices of single-family houses around them have plummeted.
The average price of a Ventura County home sold last year was $229,893, the lowest mark since the average home sold for $259,642 in 1989.
“Banks were really dropping the prices on them,” said Judy Hoag, a real estate agent in Ventura.
And home sellers are still having trouble competing with the fire sales offered by banks.
Hoag said she recently closed escrow on a home for about $200,000 in the Channel Islands neighborhood in Oxnard; it had fetched up to $290,000 five years ago. A drop like that forced many to walk away from their mortgages, she said.
“It’s a significant decrease,” she said. “Those people got in over their heads.”
But Hoag joined Nattagh and other analysts in predicting fewer foreclosures in 1995.
“I think the worst is over,” she said.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Foreclosures in Ventura County 1994: 1,654 1993: 1,635 1992: 1,052 1991: 585 1990: 215 Source: TRW-REDI
