Local foreclosures trail nation, but job losses remain a worry. (Up Front).

Sharp increases in mortgage delinquency and foreclosure rates nationwide masks a much healthier picture in California, where foreclosures are running at less than half the national rate.

The number of homeowners unable to pay their mortgages has been minimized because of limited job losses and an especially robust housing market that gives borrowers who do fall behind the ability to sell their house before it ends up in a foreclosure auction.

But economists and others warn that rising delinquencies could eventually put a crimp on the red-hot housing market.

"I don't think there's any secret in the lending community. Everyone has it on their radar screen," said Mat Soto, president of the California Mortgage Bankers Association. "They'll try to adjust and work with the homeowners so we don't have a catastrophe."

As of the end of the second quarter, California's foreclosure rate was the third best in the country, after New Hampshire and Massachusetts. Only six out of every 1,000 loans were in foreclosure in the state, according to the mortgage association, compared with 12.3 per 1,000 nationwide.

In California, 3.09 percent of mortgage loans were past due at the end of the second quarter, compared with 4.77 percent (seasonally adjusted) nationwide.

Foreclosures were started on four out of every 1,000 mortgages nationwide during the second quarter--record--but in California, the figure was only 2.2.

The actual number of defaults recorded--marking the start of the foreclosure process--fell in June to 4,361, from 5,125 for the like period a year earlier, according to the Real Estate Research Council of Southern California. In Los Angeles County, defaults fell to 1,982 default notices from 2,343 in June 2001.

"Overall, (Southern California) is better than what the national is trending," said Mark Acosta, senior vice president of foreclosure and bankruptcy loan administration for Countrywide Credit Industries Inc., one of the nation's largest mortgage lenders.

"It's primarily the result of the economic conditions. Property values are at an all-time high, which provide the borrower with alternatives before he has to get to foreclosure' he said.

Pennsylvania, South Carolina, Utah and other were in much worse shape, with two percent or more of all mortgages in the foreclosure process. The mid-Atlantic region fared worst as a group than any other in the United States. The Pacific region, including Alaska, California, Hawaii, Oregon and Washington, fared best.

Economists say high levels of consumer borrowing, low savings levels and the trend toward borrowing against home equity have contributed to the rise in national default levels. Those factors are all present in California, and if unemployment picks up--or overall employment falls dramatically--that could spell trouble here as well. Interest rates are another possible problem in the future.

"I'm looking for there to be more notices of default recorded, because I believe the employment picture is going to get worse," said Michael Carney, executive director of the Real Estate Research Council of Southern California.

The number of homes actually sold through the foreclosure process has been falling in Southern California, since peaking in 1996 and 1997. In June, there were 1,173 homes sold through foreclosure in the seven Southern California counties, compared with 1,611 in June of 2001.

With the economic recovery still tentative, it's possible that actual foreclosure numbers could rise in coming quarters, said Soto.

"I think Orange County and Southern California have got about a year, a year and a half, until they feel the impact."

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