By THOR KAMBAN BIBERMAN, The Daily Transcript

Monday, October 16, 2006

Two reports say foreclosures are soaring in San Diego County.

The County Assessor’s office reports the notices of default have climbed by 87 percent through the first three quarters of the year, and the number of foreclosures has skyrocketed by nearly 226 percent.

Notices of default — the first public notice that a mortgage is in arrears — went from 3,609 through the first nine months of 2005 to 6,744 for the like period this year. Actual foreclosures during the comparable period went from 371 to 837.

The time between the first notice of default and the actual trustee’s sale is usually 120 days in California: 90 days to cure the default and a 30 day’s notice for the sale.

Since timeshares also are included (the number of these was not available), the numbers may be somewhat deceiving. A recent RealtyTrac report concluded that approximately 4,069 were at some point in the foreclosure process by the end of the third quarter — nearly 319 percent more than the 970 at the end of the like quarter in 2005. Riverside County’s foreclosure activity also increased by about 239 percent.

"My feeling is that (foreclosures) are going to be around for a while," said David Butler, assistant county assessor. "People were buying when they could just make the monthly payment. People can’t sell, and more properties are going into foreclosure because there’s so much inventory."

Butler emphasized that while the numbers are higher than they have been for some time, they are still a fraction of what they were in the 1990s. Furthermore, by the county’s accounts, foreclosures still represent less than 1 percent of the county’s deeds. "And we don’t know how many of these are timeshares," he added.

Butler said there is cause for concern because inventory levels are growing, and the number of defaults and foreclosures have risen. He emphasized, however, that interest rates are still at low enough levels to keep most people out of trouble.

"The interest rates are now about 6 percent. When I bought my house in the 70s, it was 10 percent, and then it went to 16 to 17 percent after that, and people were sitting on the sidelines," Butler said.

Arnie Michael Levine, broker of County Foreclosures & Properties, also said while he is seeing more distressed properties these, it can’t compare to the 1990s.

Levine, citing the San Diego Association of Realtors countywide multiple listing service (MLS), said the overall residential inventory levels are typically running at about 10,000 to 12,000 in any given year. He said the level was about 15,000 in September 2006 and about 25,000 in September 2006. The figure had dropped to 21,851 as of Monday.

"The inventory has dropped by more than 3,000, and now they are not raising interest rates, so it looks like we’ll have a soft landing," Levine said.

Like Butler, Levine said the interest rates are low enough that people can often refinance their way out of trouble. But that may be a different story if an interest-only mortgage is involved. Levine placed the pre-foreclosure default rate at about 2.2 percent of all the residential transactions in the county.

Levine said he is equally worried about all the credit card debt that people are running up as any other factors that could affect the foreclosure situation.

"Look at the credit card rates. Look at what that’s doing," Levine said.

As for those interested in purchasing properties that are going through the foreclosure process, Levine said a buyer should conduct all the due diligence as with any other property transaction. Levine also suggested that people are fooling themselves if they think they can get a property for nothing.

"Banks will sell for what they can get. And if that means market price, that means market price," Levine said.

Still, Levine acknowledged there are some excellent deals are out there on very good properties.

"We see 10 to 30 percent below market, which is a great deal, but it’s something you have to work at," Levine said.

Nationally, RealtyTrac reported that 112,210 residential properties entered some stage of foreclosure in September, a 63 percent increase from September 2005.

California claims top spot among states with most new foreclosure filings, thanks to a 19 percent increase in foreclosure activity in September.

California documented 14,806 properties entering some stage of foreclosure, nearly three times the number reported in September 2005 and a foreclosure rate of one new foreclosure filing for every 825 households — 1.3 times the national average. The state’s foreclosure activity has risen more than 40 percent over the last two months.