From January to March 2007, lenders in the seven-county Southern California region filed 46,760 default notices, up 23% from the previous quarter and 148% over the first quarter of 2006, reported DataQuick Information Systems, a real estate information service. About 40% of owners who defaulted last year reportedly lost their homes to foreclosure in the first quarter, up from 9% a year ago.

The most common reason for losing a home is frequently tied to a job loss, according to Steve Bailey, senior managing director of loan administration for Countrywide Financial Corp.

"Where people actually lost their home to foreclosure," he said, "64% of the time that loss was because of a significant change of income."

Josh Nassar, vice president for Federal Affairs for the Center for Responsible Lending, a Washington, D.C.-based nonprofit, said its research indicates that of all the sub-prime loans issued nationwide in the last two years — in particular those with adjustable rates or prepayment penalties — about 20% will fail and result in the loss of a home.

The center's study compared the projected foreclosure rates nationwide on loans made from 1998 to 2001 with national foreclosure rates on loans originated in 2006. It identified the top 15 metropolitan markets nationwide expected to see the largest increases in sub-prime foreclosure rates and found that 14 are in California. They include Santa Ana, which tops the list, San Diego (ranks third) and the Oxnard, Thousand Oaks and Ventura area (seventh).

For homeowners faced with foreclosure, experts say, time is of the essence. California's nonjudicial foreclosure means that most cases in the state are handled out of court.

"The whole thing can be done in a little less than four months without the consumer ever appearing in front of a judge," said Benjamin Diehl, deputy attorney general in the consumer law section of the California attorney general's office. "So to give yourself the most options, you really need to take an active approach as soon as you fall behind."



Three in a row

Although a lender could file a notice of default after one missed payment, experts say most lenders issue a default notice with the county recorder's office after three consecutive missed mortgage payments.

The borrower then has three months from the date of the notice of default to get current with payments and any related fees or penalties.

If the borrower fails to do that, the lender can record a trustee sale notice and sell the home 20 days later. The borrower has up to five days before the public auction to settle the debt.

Once the house is sold, the lender cannot go after the borrower for the shortfall on the sale. If the borrower owed $350,000 on an original loan and the home sold for $300,000, for example, the lender couldn't come after the borrower for $50,000.