Central Valley

Foreclosures still building in Merced, San Joaquin Valley

The relentless march of foreclosures continues to ravage the Northern San Joaquin Valley.

More than 2,100 homes were foreclosed during June as Merced, Stanislaus and San Joaquin county homeowners defaulted on nearly $643 million in mortgages.

About 43,000 homes have been foreclosed in the three counties since September 2006, costing lenders nearly $16 billion in unpaid loans, according to statistics from ForeclosureRadar.

"If your home is worth a couple hundred thousand dollars less than your mortgage and your bank won't lower your principal, then letting the home be foreclosed is the financially prudent thing to do, regardless of the moral or ethical issues," said Sean O'Toole, Fore-closureRadar's chief executive officer.

O'Toole said "an awful lot of homeowners are underwater on their loans and have stopped paying their mortgages" in the Northern San Joaquin Valley.

Foreclosures for many of those homeowners were delayed by state-imposed moratoriums during the past year. But as lenders jump through the increasingly complex legal requirements, the flow of foreclosures is increasing.

During June, more than 1,000 Stanislaus homeowners received notices of default, the first step in the foreclosure process. Reaching the final foreclosure stage sometimes takes a year or more.

But 749 Stanislaus homes made it to that final stage last month, including 62 homes purchased by investors during auctions on the courthouse steps in downtown Modesto.

More foreclosures are expected, based on mortgage delinquency rates.

An estimated 13.9 percent of Stanislaus homeowners with mortgages are 90 days or more behind on their payments, according to First American CoreLogic. The delinquency rate is 17.4 percent in Merced and 14.5 percent in San Joaquin. Nationwide, the rate is 6.5 percent.

Modesto Bee staff writer J.N. Sbranti can be reached at jsbranti@modbee.com or 578-2196.