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La Jolla, CA.----The number of foreclosure proceedings started against California homeowners fell slightly in the April-through-June period compared with the prior three months, but remained higher than last year. The dip from earlier this year occurred as lenders and their loan servicers took time to revise procedures and priorities in an environment of continuing home price depreciation, economic distress and mortgage defaults, a real estate information service reported.

Lenders sent out a total of 124,562 default notices during the second quarter (April through June). That was down 8.0% from the prior quarter's record 135,431 default notices, and up 2.4% from 121,673 in second quarter 2008, according to MDA DataQuick. The San Diego firm tracks real estate trends nationally via public property records.

"There is a perception that the housing market is dragging along bottom, that it probably won't get much worse, and that the lenders need to get serious about processing the backlog of delinquencies, either with work-outs or foreclosure. We're hearing that some lenders and servicers are doing just that, hiring more people to do the necessary paperwork. That means the foreclosure numbers will probably shoot back up during the third quarter," said John Walsh, DataQuick president.

The median origination month for last quarter's defaulted loans was July 2006, the same as during the first quarter. A year ago the median origination month was April 2006, so the foreclosure process has moved three months forward during the past 12 months.

"Either the mid 2006 loans were particularly nasty, or lenders and servicers haven't kept up with new delinquencies. Looking below the surface statistics it appears likely that it's both," Walsh said.

The lenders that originated the most loans that went into default last quarter were JPMorgan's ( JPM) Washington Mutual, Wells Fargo ( WFC) and Bank of America's ( BAC) Countrywide.

Along with Bank of America itself and World Savings, they were all the most active in 2006. Their default rates are all below 10%, far below the rates of Argent Mortgage (55.1% of loans resulting in a default notice), WMC Mortgage (54.6%) First Franklin (51.8%)and New Century Mortgage (50.8%).

Many, if not most, of the loans made in 2006 are owned and/or

serviced by lending institutions other than those that made the loans (mortgages are often sold off after the initial lender originates the loan, and are often serviced by a different entity). Many of the originating lending institutions no longer exist. The "servicers" pursuing the highest number of delinquencies last quarter were JPMorgan, BAC Home Loans Servicing, and Mortgage Electronic Registration Systems.

While most first quarter 2009 foreclosure activity was still concentrated in affordable inland communities, there were signs that the foreclosure problem was intensifying in more expensive areas. The state's most affordable sub-markets, which represent 25% of the state's housing stock, accounted for more than 52.0% of all default activity in 2008. In first quarter 2009 it fell to 47.5%, and last quarter it dipped to 45.0%.

On primary mortgages, California homeowners were a median five months behind on their payments when the lender filed the notice of default. The borrowers owed a median $12,911 on a median $345,000 mortgage.

On home equity loans and lines of credit, borrowers owed a median $4,152 on a median $65,700 credit line. However the amount of the credit line that was actually in use cannot be determined from public records.

San Diego-based MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Notices of Default are recorded at county recorders offices and mark the first step of the formal foreclosure process.

Although 124,555 default notices were filed last quarter, they involved 122,829 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit). Multiple default recordings on the same home are trending down, DataQuick reported.

Mortgages were least likely to go into default in San Francisco, Marin and San Mateo counties - the historical norm. The probability was highest in Merced, Riverside, and Madera counties.

Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 45,667 during the second quarter. That's up 4.7% from 43,620 for the prior quarter, and down 27.9% from 63,316 for second-quarter 2008. They reached a record 79,511 during last year's third quarter before dropping because of a new state law that slowed the entire foreclosure process and lenders' temporary policy changes (e.g. a temporary foreclosure moratorium).

In the last real estate cycle, Trustees Deeds peaked at 15,418 in third-quarter 1996. The state's all-time low was 637 in the second quarter of 2005, MDA DataQuick reported.

There are 8.5 million houses and condos in the state.

Foreclosure resales declined slightly as a market factor, accounting for 50.1% of all California resale activity last quarter. It was 57.8% the prior quarter, a year ago it was 40.1%. Foreclosure resales varied significantly by area, from 6.3% in Marin County to 78.3% in Merced County.