Home Foreclosure Proceedings Rise; Concerns Don’t

Home foreclosure proceedings in Orange County rose 11.2% in the third quarter from the July-September period of 1995, but the increased activity doesn’t point to a weakening economy, analysts say.

Foreclosures usually trail a homeowner’s economic distress by 18 months or so. That makes the third quarter increase a graphic illustration of how bad things were, not an indication of how bad they are, says Donald L. Cohn, chief executive of La Jolla real estate information service DataQuick, which compiles the statistics.

Foreclosure activity in Orange County declined slightly from the second quarter. The 3,123 notices of default issued in the third quarter were down 6% from 3,334 in the preceding three months.

A recorded notice of default is the first step of the formal foreclosure process and there usually are far more notices filed than actual foreclosure sales. The process can take four months or more, and many homeowners either bring their mortgage payments current, deed the property to the lender, or sell their home and pay the mortgage off before the foreclosure process is completed.

Statewide, the 39,039 foreclosure notices issued in the third quarter were down a scant 0.8% from 39,391 in the second quarter but were up 18.7% from the third quarter of 1995. The third-quarter tally was well below the all-time high of 44,686 notices filed in the first three months of this year, DataQuick reported.

Cohn said he expects foreclosure activity to remain high until home prices ratchet up about 3%--increasing home values and making it possible for people who cannot make payments to receive enough from the sale of their homes to pay off their mortgages.