First-quarter foreclosure activity in California increased to the highest level in more than two years, the result of slower home-price increases, a real estate information service reported.

Lending institutions sent 18,668 default notices to California homeowners during the January-to-March period. That was up 23.4 percent from 15,122 for the prior quarter, and up 28.7 percent from 14,501 for 2005’s first quarter, according to DataQuick Information Systems.

Foreclosure activity hit a low during the third quarter of 2004 when 12,145 default notices were recorded. Defaults peaked in 1996’s first quarter at 59,897, according to DataQuick, whose default statistics go back to 1992.

“A number of factors are driving defaults higher,” said Marshall Prentice, DataQuick’s president. “The main one right now is that home values are rising more slowly than they have been the past couple of years, which makes it more difficult for homeowners to sell their homes and pay off the lender. Other factors that influence default activity include the amount of equity people have in their property, the type of mortgage they used and how long they’ve had that mortgage.”

Statewide, the annual rate of home-price increases hit a high of 22.8 percent during the second quarter of 2004. Since then, price appreciation has cooled to an annual gain of 12.4 percent in the first quarter of this year. Last quarter, San Diego County saw home values rise 4.8 percent, while its default activity jumped 59.7 percent. San Bernardino County saw home values rise 26.2 percent and defaults increase 17 percent.

The median first-quarter default amount on a primary mortgage last quarter was $9,220 on a loan of $280,000. On second mortgages and lines of credit the median amount owed was $3,386 on a loan of $56,760.

Only about 5 percent of homeowners who find themselves in default actually lose their homes to foreclosure, DataQuick reported. Most are able to stop the foreclosure process by bringing their mortgage payments current, or by selling their home and paying the home loan(s) off.

On a loan-by-loan basis, mortgages are least likely to go into default in the San Francisco Bay Area. The likelihood is highest in the Central Valley and Inland Empire.

While foreclosure properties tugged property values down by almost 10 percent in some areas nine years ago, the effect on today’s market is negligible, DataQuick reported.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. The numbers count recorded notices of default, the first step of the formal foreclosure process.

Notices of Default
Houses and condos
County/Region      2005Q1     2006Q1      %Chng
Los Angeles            3,535      4,211      19.1%
Orange                       775      1,107      42.8%
San Diego                 960      1,533      59.7%
Riverside                 1,307      2,148      64.3%
San Bernardino      1,427      1,670      17.0%
Ventura                       261        433      65.9%
SoCal Total             8,330     11,102      33.3%
San Francisco           104        127      22.1%
Alameda                    516        564       9.3%
Contra Costa             576        605       5.0%
Santa Clara                500        527       5.4%
San Mateo                 188        186      -1.1%
Marin                            64         76      18.8%
Solano                       269        294       9.3%
Sonoma                     139        157      12.9%
Napa                            29         47      62.1%
Bay Area Total      2,385      2,583       8.3%
Santa Cruz                  67        108      61.2%
Santa Barbara           93        133      43.0%
San Luis Obispo       70         75       7.1%
Monterey                    79        129      63.3%
Coast Total              309        445      44.0%
Sacramento            763      1,136      48.9%
San Joaquin           451        586      29.9%
Placer                      126        239      89.7%
Kern                         406        461      13.5%
Fresno                     494        540       9.3%
Madera                      55         79      43.6%
Merced                    135        153      13.3%
Tulare                       211        212       0.5%
Yolo                           42         48      14.3%
El Dorado                 62         54     -12.9%
Stanislaus              291        451      55.0%
San Benito               27         49      81.5%
Yuba                          23         48     108.7%
Sutter                        31         28      -9.7%
Central Valley Tot. 3,117      4,130      32.5%
Mountains Total       110         96     -12.7%
North Calif Total       250        312      24.8%
Statewide              14,501     18,668      28.7%