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And there's some good news for the nation's housing market. Numbers are out today and national foreclosure filings in February were the lowest they've been since 2006. That means on a national level, lenders repossessed fewer homes and fewer homeowners got in mortgage trouble. That's not the case though, here in California.
As NPR's Nathan Rott reports, the number of homes just entering the foreclosure process here is way up.
NATHAN ROTT, BYLINE: Berlinda Phommalayvane has a story that isn't uncommon in Southern California.
BERLINDA PHOMMALAYVANE: I bought the house 2001, for 220.
ROTT: Then Phommalayvane, a homecare provider, re-financed to help open a small business, and the $220,000 she owed jumped to...
PHOMMALAYVANE: Three fifty nine.
ROTT: By 2011, Phommalayvane was having a hard time making payments.
PHOMMALAYVANE: And, you know, they wanted to foreclose, so I had to hire an attorney.
ROTT: She applied for re-financing, loan modifications, Chapter 13 bankruptcy - everything she could to avoid losing her home.
Recently though, she received a notice of default. A notice of default - or an NOD in realty-speak - is one of the first steps of the foreclosure process. And in California, the number of NOD's is soaring.
Daren Blomquist is the vice president of RealtyTrac, a company that collects and analyzes housing data.
DAREN BLOMQUIST: We saw this spike of 57 percent in January from a year ago in notices of default statewide.
ROTT: And Southern California was even worse. In some areas, the number of NOD's more than doubled from the year previous.
In February, California was one of 14 states to see an increase. Typically, Blomquist says, that would indicate some sort of new distress in the housing market. But this might be different.
BLOMQUIST: We actually think this is old distress from the old housing bust that is finally being dealt with.
ROTT: For example in 2012, half a million California homes were in the foreclosure process - some under questionable circumstances.
Because of that, the state passed something called the Homeowner Bill of Rights. It was designed to stop abusive lending tactics and improper repossessions. And since it went into effect, shoddy foreclosures are down.
BLOMQUIST: But it's also holding back necessary foreclosures that are just being delayed as the banks figure out how to adjust to these new guidelines.
ROTT: Blomquist says the recent spike in NOD's, might indicate that the banks have figured out how to play by the new rules. And that's not necessarily a bad thing.
BLOMQUIST: It's probably going to be a little bit painful in the short term, but in the long term, this is something that needs to be dealt with before the housing market can get back to full recovery.
ROTT: Fabian Casarez is the director of realty at the Neighborhood Housing Services of the Inland Empire. They're a Southern California non-profit that - among other things - helps struggling homeowners. Casarez says he doesn't want to see anybody lose their home. But he agrees with Blomquist. Sometimes foreclosure is inevitable. In those cases, Casarez says he advises homeowners to just cut bait and offer a short sale.
FABIAN CASAREZ: Because I have so many homeowners that after they've done the short sale, they come back and they say, you know, Fabian, I wish I would have done this a long time ago, because that monkey is off my back.
ROTT: But for many homeowners, like Berlinda Phommalayvane, foreclosure isn't an acceptable option.
Have you ever thought it might be worth it just to cut your losses and try to start over?
PHOMMALAYVANE: No. Because it's a family home. I have small children. And on top of that, mom and dad lives here, so...
ROTT: She's going to keep on fighting.
Nathan Rott, NPR News. Transcript provided by NPR, Copyright NPR.
