Rapid appreciation, savvy home buyers and better loan risk management are keeping more home owners in their homes and out of foreclosure in California.

While national figures show an up tick in defaults and foreclosures, foreclosure activity in California declined to its lowest level in more than a decade during the second quarter this year, according to La Jolla, CA-based DataQuick Information Services.

Only 18,144 California home owners faced foreclosure proceedings during the second quarter, DataQuick said. Nationwide, about 640,000 home owners were about to lose their homes during the first quarter, the latest numbers available from the Mortgage Bankers Association of America.

Statewide foreclosure activity was down 22.5 percent from the first quarter and 7 percent from the second quarter a year ago, Dataquick reported.

Foreclosures fell in most regions including Los Angeles County, 9.3; Central Valley, 12.8 percent; San Bernardino, 19.9 percent and Santa Cruz/Monterey region, 22.4 percent.

Double digit up ticks were present in the technology economy-driven San Francisco Bay Area, where foreclosure activity rose nearly 13 percent. However, in some areas where foreclosure activity increased, the number of actual foreclosures were negligible.

In San Francisco, for instance, the 17.3 percent year-to-year increase in foreclosure proceedings represented a jump from 105 during the second quarter of 2001 to 124 during the second quarter this year.

"The devil is in the details. Our numbers represent defaults. About 90 percent get bumped out one way or another. Actually foreclosures in San Francisco is probably under 10," said Dataquick's John Karevoll.

Statewide, 75 percent of home owners in default were able to stop the foreclosure process. In the mid-1990s only half of distressed home owners were able to avoid financial fate.

A total of only 4,477 trustees deeds were recorded on Golden State homes last quarter. A trustees deed is the final step in the foreclosure process when lenders take properties back.

Karevoll says the numbers are so low because most home owners have accumulated so much equity they can refinance there way out of financial trouble with a low interest loan or borrow against the equity to pay arrears.

"As odd as it sounds, today's numbers are somewhat low. They'll go up a bit as appreciation rates level off, which we expect will happen before the end of the year. Right now, anybody who's in financial trouble has no problem refinancing, or selling the home for more than enough to pay the mortgage off," said Mike Ela, DataQuick's president.

Even as the economy has slowed, the median price of homes in California -- a record $319,650 in the second quarter -- surged ahead 23.5 percent since last year and 8.1 percent just since the first quarter, according to the California Association of Realtors. Southern California has seen greater gains than Northern California.

Karevoll also said more and more buyers are mortgage savvy and make financially prudent choices when they buy. When times do get tough, home owners make financial sacrifices elsewhere to hold onto what is likely their most valuable asset.

"Especially now with the stock market the way it is. They are using tried and true 30-year fixed rate mortgages, they are making sizable down payments and they are not pushing financing to the edge of the cliff," Karevoll said.

Improved underwriting technology that helps lenders reduce risk and defaults, has also allowed more people than ever to buy homes.

"People who were on the outside with sketchy documentation, but the ability to pay, are on the inside now. Some of them were multiple-family households, even bankruptcies," Karevoll said.

"Five years ago, you were excluded if you went bankrupt. Now they pitch you a mortgage from billboards," he added.

God bless America.