LA JOLLA, Ca. ( TheStreet) -- The number of California homes pushed into the formal foreclosure process between April and June dropped for the fifth consecutive quarter to the lowest level in three years.

The declines were greatest in the most affordable areas, where foreclosure activity continues to fall from extremely high levels over the past two years, a real estate information service reported.

A total of 70,051 Notices of Default ("NODs") were filed at county recorder offices during the April-to-June period. That was down 13.6% from 81,054 for the prior quarter, and down 43.8% from 124,562 in second-quarter 2009, according to San Diego-based MDA DataQuick.

Last quarter's total was the lowest since second-quarter 2007, when 53,943 NODs were recorded. The peak was in first-quarter 2009 when 135,431 homeowners received foreclosure notices.

"Obviously, motivated sellers and accommodating lenders have played a part in bringing the default filings down, especially when it comes to short sales. Public policy has also been a factor. We also need to remember that prices have come up off bottom over the past year. If they continue to rise, fewer homeowners will find themselves under water, which is a significant factor in letting a home go," said John Walsh, DataQuick president.

While mortgage defaults spread from lower-cost sub-markets up into more expensive neighborhoods over the last year, that trend appears to be leveling off. The most affordable zip codes in the state, representing 25% of the total housing stock, accounted for 40.1% of all default activity last quarter, down from 40.9% the prior quarter and down from 44.9% a year ago.

California's mid and high-end markets tended to see smaller quarter-to-quarter and year-over-year declines in mortgage defaults last quarter. For example, zip codes statewide with median sale prices of $8000,000-plus collectively saw mortgage defaults drop 11.3% from the prior quarter and 30.4% from a year ago. At the other end of the price spectrum, zips with sub-$300,000 medians saw defaults fall 13.4% from the prior quarter and drop 46.2% from a year ago.

However, the concentration of defaults remained much higher in the less expensive areas: Zips with sub-$300,000 medians collectively saw 10.6 default notices filed for every 1,000 homes last quarter, compared with 2.9 per 1,000 homes in zips with $800,000-plus medians.

Although the number of default notices filed on homes with $800,000-plus mortgages is down from last quarter and a year ago, those high-end defaults now represent a greater percentage of all defaults because NODs have dropped more steeply in lower-cost areas.

Last quarter 6.1% of the default notices filed in 15 of the state's priciest coastal counties, from San Diego to Marin, were on homes with $800,000-plus mortgages. That's up from 5.9% the prior quarter and 5.7% a year ago, to the highest level since the foreclosure crisis began nearly five years ago.

On primary mortgages, California homeowners were a median five months behind on their payments when the lender filed the NOD. The borrowers owed a median $15,008 in back payments on a median $325,567 mortgage.

On home equity loans and lines of credit in default, borrowers owed a median $4,187 on a median $65,740 credit line. However the amount of the credit line that was actually in use cannot be determined from public records.

While many of the loans that went into default during second- quarter 2010 were originated in early 2007, the median origination month for last quarter's defaulted loans was August 2006, one month ahead of July 2006 for the prior four quarters.

The lenders that originated the most loans that went into default last quarter were World Savings (2,982), Washington Mutual (2,547), Countrywide (2,532), Wells Fargo (2,177) and Bank of America (1,049). These were also the most active lenders in the second half of 2006, and so far their default rates on loans in that period are well below 10% .

Smaller subprime lenders had far higher default rates for loans originated during that period: ResMAE Mortgage, Ownit Mortgage, Master Financial, First NLC Financial Services and Fieldstone Mortgage all had default rates of more than 65% of their originated loans. These and most other subprime lenders are long gone.

Most of the loans made in 2006 are owned and/or serviced by institutions other than those that made the loans. The servicers pursuing the highest number of defaults last quarter were ReconTrust Co, Cal-Western Reconveyance and NDEx West.

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 70,051 default notices were filed last quarter, they involved 68,734 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, following the historic norm. The probability was highest in Madera, Sutter and Merced counties.

The number of Trustees Deeds (TDs) recorded, which reflect the number of houses or condo units lost at the end of the foreclosure process, totaled 47,669 during the second quarter. That was up 11.2 % from 42,857 for the prior quarter, and up 4.4% from 45,667 for second-quarter 2009. The all-time peak was 79,511 in third-quarter 2008.

In the last real estate cycle, TDs 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 California.

Collectively, some of California's most expensive zip codes saw a relatively large increase in the number of homes foreclosed on last quarter. For example, the 92 zip codes that had $800,000-plus median sale prices in the first half of this year saw the number of homes foreclosed on jump 33.6% quarter-to-quarter, and jump 65.7 percent from a year earlier. Last quarter's foreclosure total in these high-end areas was at its highest level since lender repossessions began their steep ascent four years ago.

Still, the concentration of foreclosures in these zips with $800,000-plus median sale prices was relatively low last quarter -- 1.2 foreclosures per 1,000 homes. That compares with 5.6 foreclosures per 1,000 homes across all zip codes statewide last quarter, and 9.9 foreclosures per 1,000 homes in zips with median sale prices below $200,000. The latter areas - places hit hardest by foreclosures in recent years - collectively saw foreclosures rise 10.4% from the prior quarter but fall 4.5% from a year ago.

On average, homes foreclosed on last quarter took 9.1 months to wind their way through the formal foreclosure process, beginning with an NOD. That's up from 7.5 months for the prior quarter and 6.4 months a year ago. The increase could reflect, among other things, lender backlogs and extra time needed to pursue possible loan modifications and short sales.

Of all the homes foreclosed on statewide during a two-year period ending in March this year, 85.7% had been resold on the open market as of the end of last month. A year ago the figure was 83.5 percent. It cannot be determined from public records how many of the unsold foreclosed properties are currently for sale, not for sale or have been made rentals (and therefore should not be expected to sell anytime soon).

Foreclosure resales accounted for 36.0% of all California resale activity last quarter. It was down from a revised 42.5% the prior quarter, and down from 49.9% a year ago. The peak was 57.8% in first-quarter 2009. Foreclosure resales varied significantly by county last quarter, from 9.5% in San Francisco to 61.7% in Imperial.

At formal foreclosure auctions held last quarter, an estimated 25.5% of foreclosed properties were bought by investors or others who don't appear to be lender or government entities. That was up from 24.6% the previous quarter and 17.9% a year ago, DataQuick reported.