More than 31,000 homes in Southern California were repossessed in the first eight months of 1993 because of mortgage defaults, according to TRW Redi Property Data, Riverside, Calif.
The number is up sharply from the 17,588 foreclosures in the period a year ago and 8,825 two years ago.
The number of foreclosures is a trailing indicator of the economy because it reflects problems of borrowers more than six months ago, said Nima Mattagh, a market analyst with TRW Redi.
But he added the foreclosures would put additional property onto an already depressed market, dimming prospects for an early recovery in property values.
Tom O'Donnell, an analyst with Prudential Securities, New York, wrote recently in a report on Great Western Financial:
"We do not expect to see a continued improvement in loan quality until the Southern California real estate market begins to stabilize. In our view, such a stabilization is not likely to take place until late 1994 or even 1995."
As a result, he continued a hold rating on Great Western's shares.
Mr. Mattagh said foreclosed property was being sold for an average of about 80% of the loan value. He noted that the sales had the effect of eroding the local tax base because the discounted prices of the property would become the new assessed value.
Elsewhere in the state, the foreclosure picture is less severe. TRW Redi's figures showed 4,599 foreclosures in four key Northern California counties in the first eight months, up about 41% from a year earlier.
Late last week, the Mortgage Bankers Association asked, the U.S. District Court for the District of Columbia for another 60-day stay in its suit against the federal government that challenges the rules formulated under the Real Estate Settlement Procedures Act, or Respa, that HUD issued last November.
The Mortgage Bankers have told the court it wants to give the Department of Housing and Urban Development more time to complete a review of its Respa regulations.