HOMES FALL INTO DEFAULT : SOUTHLAND SHOWS MOST FORECLOSURES.

Byline: Gregory J. Wilcox Daily News Staff Writer

In a blow to the region's rebounding real estate market, Southern California outdistanced the rest of the state in foreclosures in 1996, an industry tracking company said Tuesday.

Last year, lending institutions foreclosed on 92,120 properties statewide, a 19 percent jump from 1995, said Anaheim-based Experian, a real estate information service company. Combined, the foreclosed properties had a mortgage value of $13.8 billion.

Of the foreclosed properties, 69,628 were in Southern California. And Los Angeles County accounted for nearly half of the region's total.

``The number in Southern California is obviously alarming,'' said Experian market analyst Nima Nattagh.

Several factors were to blame:

Regulators told lenders last year to move quicker in getting problem properties off their books. So notices of default, the first step in the foreclosure process, were issued when property owners were about six or seven months behind in their payments rather than a year or longer.

Lenders wanted to get these properties quickly back on a market in which sales were increasing.

Many of the original loans had small down payments. As property values have dropped, property owners find they owe more money on property than it's worth.

Last year's total is by far the most repossessions since Experian began keeping track in 1989, where there were 15,205 statewide and 7,481 in Southern California. They have increased every year since then except two - 1990 and 1995.

California began seeing double-digit jumps in foreclosures in 1991 when a deep recession triggered a decline in home values.

Nattagh said Experian's report is further evidence that all is not well with California's real estate market, despite steady gains in sales.

It also suggests that many homeowners continue to face difficulties in meeting their mortgage payments. Experian recently estimated that there are 477,000 California homeowners with negative equity - a situation brought about by a combination of low down payment mortgages and declining values.

``The recent rise in property repossessions could well be reflective of lenders' willingness to foreclose on delinquent loans more swiftly than before, but it is also a symptom of deteriorating quality of mortgages being originated,'' Nattagh said.

In the early 1990s, mortgages that required less than 10 percent down payment accounted for one-fifth of all new home loans in California. Today, that ratio has doubled in a market where home values continue to show signs of weakness.

Jim Link, executive vice president of the San Fernando Valley Association of Realtors, said repossessed properties will continue to exert downward pressure on resale prices this year.

``I'm hoping that the numbers should start declining in 1997,'' he said.

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Chart: (Color) FORECLOSURES ON THE RISE

Finanncial institutions foreclosed on more than 92,000 properties worth a combined $13.8 billion in 1996.