Foreclosure rates have stabilized this year in North San Diego and Southwest Riverside counties, according to a North County Times analysis of data from ForeclosureRadar.
Thanks to a gently improving economy and rising short sales, in which underwater homeowners sell for less than they owe in mortgages, the number of foreclosures has been sliding on a year-over-year basis for 17 of the last 18 months in North County and for 29 consecutive months in Southwest Riverside County.
"The egg continues through the snake; we've passed the bulge," said Mark Goldman, an instructor at the Corky McMillin Center for Real Estate at San Diego State University.
A foreclosure crisis that kicked off in 2006 peaked in 2008 in North San Diego County at 2.6 per 1,000 households, and at 9.8 per 1,000 households in Southwest Riverside County.
In September this year, the rate in North County hit 0.7 per 1,000 households, up 33.9 percent from August, but down 16 percent from September 2011. In Southwest County, the foreclosure rate sank to 2 per 1,000 households, down 16.7 percent from September 2011, but up 22.5 percent from August.
Perhaps more encouraging was a drop in the number of mortgage defaults in September. A default starts the official foreclosure process, while a foreclosure sale ends it.
In Southwest County there were 2.5 defaults per 1,000 households, down 24 percent from August and down 44.1 percent from a year earlier. In North County, the number of defaults reached 1.2 per 1,000 households, down 10.8 percent from August and down 40.4 percent from a year earlier.
Government and bank programs to modify mortgages to lower payments have helped a few homeowners, but the big change has been a focus on short sales by lenders. Lenders lose less money on short sales than they do on foreclosures, Goldman said.
"Banks may be figuring that out and mitigating a lot of their losses," he said.
A small rebound in home prices may also be helping homeowners avoid foreclosure.
In North County, the median home price rose 5.3 percent in September compared to a year earlier, according to the North San Diego County Association of Realtors. In Riverside and San Bernardino counties, an index of home prices rose 6 percent year-over-year, according to data company CoreLogic.
When a home's value rises above the amount a homeowner owes in mortgages, the homeowner has equity in the house. Thus, if they can't make mortgage payments, they can always try a traditional sale and avoid a foreclosure proceeding.
"Values are stabilizing," Goldman said. "Not real fast, but they're coming up."
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