Foreclosures Down, but Default Notices Are Up

Two companies that track foreclosure trends in California are reporting an increase in the number of Ventura County homeowners who are drawn into the process, but a decrease in property owners who actually lose their houses.

DataQuick Information Systems reports that the number of Ventura County homeowners who received notices of default--the first step in the foreclosure process--is up 39.9% through April of this year over the same period in 1995.

For the same months, however, TRW Redi Property Data showed a 10.5% decrease in actual foreclosures in the county. This contrasts with statewide figures, which show an increase in foreclosures throughout California.

The foreclosure process can take four months or more, and many homeowners either bring their mortgage payments current, deed the property to the lender or sell their home and pay the mortgage off before the foreclosure process is completed.

TRW’s report showed 433 foreclosures in Ventura County between January and April of this year, compared with 484 for the same months in 1995 and 556 in 1994.

DataQuick reported that 1,108 homeowners received notices of default during the first four months of the year, compared with 792 for the same period in 1995.

Both real estate information companies said many lenders are moving more quickly than in the past to initiate foreclosure proceedings against homeowners who have fallen behind in their payments.

DataQuick officials say the change in policy among lenders accounts for the increase of property owners who find themselves involved in foreclosure proceedings.

“We should see foreclosure activity level off somewhat between now and this fall, but the problem will certainly be with us well into next year,” said Donald L. Cohn, DataQuick’s CEO.

Statewide, TRW reports that property repossessions are up by 16% compared with the same period a year ago. Further, there is evidence to suggest that the quality of mortgages originated over the last three years has progressively deteriorated.

Mortgages originated during 1994 and 1995 are now going into foreclosure much earlier than 1992 and 1993 loans.

“While this recent rise in foreclosures pales in comparison to the situation we had in the early 1990s, there is concern that further increases will have a generally adverse impact on home values,” said Nima Nattagh, TRW Redi’s market analyst.

Foreclosed properties are typically disposed of by lenders at deep discounts.