California Homeowners in Default

The number of Bay Area homeowners in danger of losing their homes to foreclosure spiked this spring, as more people found themselves unable to make their mortgage payments or sell for enough money to cover their loans.

A total of 2,910 homeowners in the nine-county Bay Area got "notices of default"' from their mortgage lenders in the April-through-June period, a 37 percent increase from the same time in 2005, according to a report issued recently from DataQuick Information Systems.

But in Santa Clara County, where home prices have held up better than in most other counties, the increase was the second-lowest in the Bay Area and second-lowest in the state. Five hundred thirty homeowners received default notices in the second quarter, up 14.5 percent from a year earlier.

A smaller proportion of homeowners face foreclosure in California than in most other states, largely because home values have risen quickly enough here that they can sell at a profit. But experts said the spike in defaults suggests that as home prices flatten or drop and higher interest rates squeeze household budgets, even more Californians will slide toward foreclosure in the coming months.

Notices of default are the first step in the foreclosure process.

Statewide, the number of homeowners in default reached 20,752, a 67 percent increase from the second quarter of 2005, when default rates hovered near historic lows. It was the steepest increase in at least 14 years, DataQuick said.

San Mateo County saw defaults increase 51 percent, to 222 homeowners. In Alameda County there was a 42 percent increase, to 649. Santa Cruz stayed flat from last year, at 73.

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