"The problem isn't going away anytime soon," said Andrew LePage, an analyst with DataQuick Information Systems. "We're still looking for some sign of a peak in foreclosure activity."
Lenders took back 6,579 homes in the nine-county Bay Area during the first quarter, up from 1,493 a year ago and 4,573 in the fourth quarter, according to a report released by DataQuick on Tuesday. Throughout California, 47,171 homes were foreclosed on, up from 11,032 a year ago. The regional and state figures are now at their highest level in more than 15 years.
It's just the newest benchmark in a housing crisis that has set one after another. The national real estate downturn reached critical levels last summer as resetting subprime loans and falling home values precipitated growing numbers of defaults and eventually an international liquidity crisis. The big jump in foreclosures will place additional pressure on home prices, which could lead to further foreclosures, economists say.
Each case can have a devastating impact on a family or individual.
Raul Gonzalez and his wife, Margarita Narvaez, were thrilled after buying a San Jose home two years ago. The feeling faded quickly.
Gonzalez, who immigrated from Mexico in 2000, said he unwittingly used a negative-amortization loan, in which the monthly payment covered only a portion of the interest. The balance grew each month, and after the teaser rate expired, the monthly payment rose well beyond what the 33-year-old painter could afford.
The main lender foreclosed on the three-bedroom home in late January and the family traded their keys for cash, moving into an apartment later that month.
Suit alleges fraud
The couple filed a lawsuit against the mortgage broker, Realtor and one of the lenders, asserting they were defrauded, among other claims. But the strain of the situation led to health problems, Gonzalez said, and the hit to his credit rating means they have little hope of buying another home anytime soon.
"The reality is, I can't do anything," Gonzalez said in Spanish through a translator, his attorney. "Perhaps it's better to leave these problems and only rent, because I have to take care of myself."
Declining home values and resetting adjustable rate mortgages are combining to drive up the rate of foreclosures, said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University in Orange. Many borrowers agreed to loans with initial teaser rates because they believed they could refinance when their payments increased, he said. Instead, declining home values erased the equity necessary to do so.
The median price for resale homes in the Bay Area slid 20.4 percent year over year to $549,000 in March, with sales off 40.6 percent, DataQuick reported last week.
Contra Costa has most
Areas hardest hit by foreclosures experienced the biggest price declines. Contra Costa County recorded the highest number of foreclosures in the first quarter, 2,228. Bank-seized homes represented nearly half of all sales in March and prices dropped by about a third to $409,000.
The largest increases were in Sonoma County, a 472.3 percent jump to 538, and Santa Clara County, a 471.6 percent increase to 926. Marin County saw the least number of foreclosures, 76, followed by Napa with 112 and San Francisco at 124.
Neighborhoods defined by ZIP codes in Antioch, Richmond, Vallejo, Oakley and Suisun City continued to experience some of the highest levels of foreclosures. But some neighborhoods that previously had few, including San Francisco's Hunters Point and several in Santa Rosa and San Jose, saw an escalation in foreclosure rates.
There's little reason to believe the worst is past, Adibi said.
Surveys by financial services company Credit Suisse and others show the number of resetting adjustable rate mortgages will rise this spring and summer. That will bump up payments for many borrowers and may lead to missed payments and default notices in the months ahead.
Threat of recession
Also, many economists believe the nation has already fallen into a recession, which could lead to job losses that would further undercut owners' ability to pay their mortgages.
"There's going to be added pressure," Adibi said.
In another indication that foreclosures are likely to climb, mortgage defaults jumped nearly 150 percent in the region and state from January to March. Lending institutions sent Bay Area homeowners 16,398 default notices, up from 6,730 a year ago and 12,704 in the preceding quarter, DataQuick said. These notices are considered the first step in the foreclosure process.
Statewide, lenders issued 113,676 default notices, up from 46,760 a year ago and 81,550 in the fourth quarter.
The soaring foreclosure and default rates come in spite of calls by banking regulators and government officials for lenders to modify the loans of distressed borrowers, a request many lenders claim they've heeded.
Modifications in dispute
But several surveys by the California Reinvestment Coalition have found these so-called workouts are the exception, foreclosures the rule. Loan servicers often don't return calls from borrowers, renege on promised changes just before foreclosing or offer modifications that leave owners with higher monthly payments, said Kevin Stein, associate director of the San Francisco consumer advocacy organization.
"Things are getting worse," he said.
Dustin Hobbs, spokesman for the California Mortgage Bankers Association, a Sacramento trade group for home lenders, disputed the characterization. He said the Hope Now Alliance, a coalition of lenders, has worked out more than a million loans since last summer.
"This industry is making, has made and is continuing to make an unprecedented effort to reach out to distressed buyers," he said.
In a prepared statement, U.S. Sen. Dianne Feinstein, D-Calif., said Congress must do more to help borrowers.
"We need to clean up the industry to protect future home buyers, and to help ensure this never happens again," she said. "We must take action to restore confidence in the American Dream of home ownership."
This article appeared on page A - 1 of the San Francisco Chronicle
Recently released figures have revealed that the number of foreclosures in California, United States has more than quadrupled. The figures for the first quarter of 2008 show a significant increase on previous figures.

There were 47,171 foreclosures on California properties in the first quarter of 2008. The figure for the same period last year was just over 10,000.

The Attorney General of Arizona released a report that showed an increase. It said that "the collective efforts of servicers and government officials to date have not translated into meaningful improvement in foreclosure prevention outcomes." The Attorney General also commented on the report: