Area foreclosure rate hits 3.7 percent in May

Area foreclosure rate hits 3.7 percent in May
By Rachel Raskin-Zrihen/Times-Herald staff writer
Posted: 07/08/2009

Amid hopes that the mortgage crisis bottom has been reached, Vallejo-Fairfield area foreclosure rates increased in May over the same period last year, according to a new industry report.

First American CoreLogic, which collects national, state and local real estate data, reports the area foreclosure rate among outstanding mortgage loans was 3.7 percent for May. That's an increase of 1 percent over last May.

Foreclosure activity here is more than 1 percent higher than the national rate of 2.5 percent for May, according to the report.

That translates into hundreds of households in trouble, said Solano Association of Realtors President George Oakes. He said the increase isn't surprising, considering that a moratorium on foreclosures recently ended.

"We're seeing a lot of short sales -- people selling their home for less than they owe, to avoid a foreclosure," Oakes said. "That's a new trend."

Also not surprising to Oakes, the report shows the area's mortgage delinquency rate also has increased.

"We've been in the top in this area since the beginning. It follows a pattern," he said.

The report reveals that in May, slightly more than 11 percent of mortgage loans in Solano County were 90 days or more delinquent compared to just over 8 percent last year.

"That's a lot," Oakes said, "But it seems to be following the unemployment trends. To me these things are linked together."

But houses here, especially the lower-priced ones, "are selling almost faster than they come on the market," he said. A high percentage of buyers appears to be investors, he added.

"For the first time in probably 15 years, you can buy a rental property, and with a little work, can rent it out for a positive cash flow. There's a whole new trend out there. People are seeing their 401k's and stocks aren't doing as well, and they're buying rental properties with cash. It's strange stuff," Oakes said.

The CoreLogic report reveals that during the past 12 months, from June 2008 to May 2009, 17,357 foreclosures were filed in Solano County. That's more than 47 per day. During the previous 12-month period there were 11,709 foreclosures filed, about 32 per day, according to the report.

Oakes questions those figures. "Holy smokes," he said. "I don't see nearly that many. About half of all properties that start the foreclosure process are cured, but still, that sounds like a lot, even if it's 8,000. I don't see them hitting the market."

The foreclosure process includes three steps, starting with the notice of sefault, which typically occurs after the 90-day delinquency period. That's followed by the notice of foreclosure sale, when the property is scheduled for auction, which is followed by the notification of aale, filed after the property is sold at auction.

If the property isn't sold at auction, it goes back to the lender and is considered Real Estate Owned.

Foreclosure data for First American CoreLogic is reported based on the actual number of active mortgage loans and excluding paid-in-full mortgages from the equation, thereby providing more accurate results, the firm says.

Contact staff writer Rachel Raskin-Zrihen at (707) 553-6824 or RachelZ@thnewsnet.com.