According to a story from DataQuick, the number of default notices sent to California homeowners in the first quarter increased to the highest level in almost ten years. They attribute this to flat appreciation, slow sales and post teaser-rate mortgage resets.

Mortgage lenders filed 46,760 Notices of Default during the first quarter of 2007 which is up 8,766 from the previous quarter, a 23.1 percent increase. Compared to the first quarter of 2006 the increase in Notices of Default filings was 148 percent.

According to the story loans were least likely to go into default were in Marin, San Francisco and San Mateo counties and more likely in Sacramento, Riverside and San Joaquin counties. It is clear, counties where there has been rapid growth and a great deal of new housing built during the past few years is where we are seeing the growth in foreclosure activity.

The percentage of homeowners who actually end up losing their home to foreclosure after getting a Notice of Default is small. During the first quarter 40 percent of the homeowners who were in default last year lost their home. The increase is dramatically evident when you compare that to the last quarter of 2006 when only 9 percent lost their homes to foreclosure.

Most borrowers end up bringing their payments current, refinancing, or selling the home. The time line from Notice of Default to setting a foreclosure sale date is 3 months and there are many step that must be followed and time for borrowers to bring their loans current or find other solutions. Unfortunately some of the solutions available in past few years are not there now or harder to obtain. In the past, rapid equity growth allowed homeowners to refinance easily or use equity lines of credit to help make payments. Today many of these borrowers are faced with little or no equity and tougher credit requirements to refinance.

Actual foreclosures in the first quarter of 2007 totaled 11,033, almost double what it was in the previous quarter and up over 800 percent from the first quarter last year when only 1,223 houses were foreclosed. Foreclosures reached a record high of 15,418 in the third quarter of 1996. The lowest quarter of foreclosure sales was the second quarter of 2005 with 637 sales.

Looking at our local market reveals that with the exception of Placer County the foreclosure activity here is higher than the State levels. In Sacramento there was an increase of 184.7 percent in the first quarter compared to the same period last year with a total of 3,234 Notices of Default filed. El Dorado County saw an increase of 305.6 percent with a 219 NoD's filed. In Yuba County there was 151 Notices filed which amounted to a 214.6 percent increase from the first quarter of 2006. Placer County was below the State percentage increase of 148 percent with 518 notices filed compared to 239 a year ago or a 116.7 percent increase.

News on the street says that lenders are working hard to find ways to help borrowers who are struggling to make payments. Freddie Mac said it would provide backing for up to $20 billion in new mortgages to aid distressed subprime borrowers and Washington Mutual Inc. said it will refinance up to $2 billion in subprime mortgages to help borrowers avoid default and foreclosure.

The problem facing many troubled borrowers is that most of the adjustable-rate mortgages taken out recently can't be easily rewritten, according to the chairman of the FDIC. About 75% of the $600 billion in subprime ARMs taken out in 2006 have been securitized (sold in the secondary market) which means that neither the servicer of the loan nor the original lender can easily negotiate with the borrower to change the terms of the loan. Reworking the terms of the loan after it's been securitized "can be very difficult and may require extraordinary actions," since "once the lender has sold the mortgage to the issuer, the lender no longer has the power to restructure the loan or make other accommodations for its borrower."

To read more about foreclosure activity see the full story, "California Foreclosure Activity Jumps Again, on the DataQuick website.

Julie Jalone is an experienced professional RealtorÂ(r) serving buyers and sellers of residential real estate in the Greater Sacramento area including Placer and El Dorado counties. Some of the communities served by Julie include Sacramento, Roseville, Rocklin, Lincoln, Loomis and Granite Bay. To learn more about Julie, visit her website, jalone.com, where you will find additional articles, current listings, home search, news, resources for buyers and sellers and her daily blog, "Keep it Real in Sacramento." While you are at jalone.com, check out Julie's reality real estate series, a href="http://www.jalone.com/id46.html">"MyForSaleSign."