Home foreclosures hit record high in California

In the previous three months, which also set a record, 63,316 homes were lost to foreclosure. That's a huge swing from an all-time low just two years ago of 637 in the second quarter of 2005.

Nationally, RealtyTrac Inc. reported that the number of homes being repossessed was up 126% over the last three months, totaling 250,091 homes from July to September. The five states with the most foreclosures were California, Florida, Michigan, Arizona and Texas.

At the same time, California saw a sharp decline in activity from banks taking the first steps toward foreclosure. The number of default notices that lenders send to homeowners fell last quarter for the first time in three years, down 22.5% from last quarter but up 29.9% from the same period last year.

Housing experts say that change is the direct result of a new state law that forces lenders to make repeated attempts to contact a homeowner before foreclosing on the home.

"If that procedural change hadn't kicked in during early September, indications are that third-quarter default filings would have been about the same as the record number filed in this year's second quarter," DataQuick said in a press release.

Housing experts continue to predict that foreclosures will rise for the rest of 2008 and into 2009 before hitting their peak.

"It will get worse," said Jeff Lazerson, the president of Mortgage Grader, an online mortgage clearinghouse. "It's going to be driven by unemployment and underemployment, and we're seeing those numbers go up. I think we won't see a peak until at least next year."

Heisel is a Times staff writer.

william.heisel@latimes.com