Residential foreclosure activity in California reached its highest level in more than four years in the third quarter, real estate data company DataQuick Information Systems reported.

Lending institutions sent 26,705 default notices to homeowners in the state during the three-month period ending in September, DataQuick announced, which was the highest number since first-quarter 2002, when 30,225 default notices were issued.

That was up 28.3 percent from 20,812 for the prior quarter, and up 111.8 percent from 12,606 for 2005’s third quarter, according to the announcement.

Foreclosure activity hit a low during third-quarter 2004 when 12,145 default notices were recorded. Defaults peaked in first-quarter 1996 at 59,897. DataQuick’s default statistics go back to 1992 and the quarterly average is 32,653.

“Foreclosures happen when people owe more on their property that the property is worth. When prices are going up fast, as they were last year and the year before, the number of homeowners in that situation steadily declines. When prices are flat, or going down, fewer homeowners in financial distress are able to use their homes to bail themselves out of trouble,” said Marshall Prentice, DataQuick’s president, in a statement.

Statewide, the annual rate of home-price increases hit a high of 22.8 percent during second-quarter 2004. Since then, price appreciation cooled to 3.7 percent last quarter.

Notices of default are recorded at county recorders’ offices and mark the first step of the formal foreclosure process.

The median age of the home loans that went into default last quarter was 14 months, and more than half were originated in 2005.

On primary mortgages, homeowners were a median of five months behind on their payments when the lender started the default process. The borrowers owed a median $9,829 on a median $306,000 mortgage, DataQuick reported.

On lines of credit, homeowners were a median six months behind on their payments. Borrowers owed a median $3,200 on a median $60,000 credit line. DataQuick noted that the amount of the credit line that was actually in use cannot be determined from public records.

On a loan-by-loan basis, mortgages were least likely to go into default in Marin, Napa and San Francisco counties. The likelihood was highest in Fresno, Merced and Riverside counties.

Historically, the percentage of mortgages in default has been higher in lower-cost inland markets, the company also noted.

“Most homeowners emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. Still, about 19 percent of homeowners who found themselves in default earlier in the year actually lost their homes to foreclosure in the third quarter. A year ago it was 6 percent,” according to the report.

Trustees’ deeds recorded on homes totaled 3,424 during the third quarter, up 76.9 percent from 1,936 for the previous quarter and up 362.1 percent from 741 for third-quarter 2005.

Trustees’ deeds, or actual foreclosure sales, peaked at 14,896 in second-quarter 1997 and hit a low of 636 in second-quarter 2005.

There are 7.81 million houses and condos in the state, DataQuick reported. “While foreclosure properties tugged property values down by almost 10 percent in some areas nine years ago, the effect on today’s market is negligible.”

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