Feeble sales, falling home values and a market thwarted by subprime loans fueled a sharp rise in foreclosures and default notices during the second quarter.

In Ventura County, there were 316 trustees' deeds recorded, or the loss of a home to foreclosure, DataQuick Information Systems reported Tuesday. The number of foreclosures was up 754.1 percent from 37 over the same April to June period a year ago.

The percentage change is very dramatic, but it's coming off a very low base, said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp.

"We're going from a market that was red-hot, fueled by easy lending, that is now basically stone-cold," Kyser said.

Notices of default rose 134.3 percent in the second quarter, from 452 last year to 1,059 this year.

Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project, was more concerned about the number of defaults last year that turned into foreclosures than the increase in default notices in the second quarter.

"The longer we see huge declines in sales and an increase in foreclosures, the more likely that's going to impact housing prices," Watkins said.

Residential sales dropped off 28 percent last year, and Watkins forecasts a 20 percent decline this year.

Last quarter, lenders filed 53,943 default notices statewide — the highest level since the fourth quarter of 1996, when 54,045 notices were recorded, according to DataQuick, a La Jolla-based real estate information service. Second-quarter defaults were up 158 percent from 20,909 for the same period a year ago and 15.4 percent from the first quarter.

A majority of homeowners, 54.6 percent, are able to avoid foreclosure by getting current on their mortgage payments, refinancing, or selling their home and paying off what they owe. But that percentage is down from 88 percent last year. Default notices are the first step in a lengthy process toward foreclosure.

Most of the loans that went into default in the last quarter were originated between July 2005 and August 2006. The median age of the default loans was 16 months. The median is the midpoint, where half the loans were in default longer and half shorter.

The use of adjustable-rate mortgages for primary purchase home loans peaked at 77.8 percent in May 2005, but has since fallen, DataQuick said.

A lot of the loans that went bad in the last quarter were made at or just beyond the cycle's peak, between summer 2005 and summer 2006, DataQuick President Marshall Prentice said in a statement.

"Appreciation rates for most of that period were in the double digits and lenders let many households stretch their finances to the max and beyond," Prentice said. "It's that pool of beyond' mortgages that the market is working its way through."

The news is going to continue to be gloomy since the peak of subprime lending occurred in early 2006, and that wave hasn't hit yet, said Kyser, who forecasts that the residential real estate market won't improve until 2008.

A record 17,408 foreclosures occurred statewide in the second quarter, according to DataQuick statistics, which date back to 1988. California's foreclosures soared 57.8 percent from 11,032 the previous quarter, and up 799.2 percent from 1,936 for the same period last year.

California is among the country's leading areas in foreclosures, along with Florida, Nevada and the Midwest, which is still reeling from auto industry losses, Kyser said.

Areas hit hardest will be those with a lot of new housing development.

Ventura County has been stronger than many other communities for that reason, Watkins said, noting that it might have some residual repercussions from Los Angeles, San Bernardino and Riverside counties.

He's expecting to see more defaults and foreclosures in pockets of the county where there has been the most growth — Oxnard, Camarillo, Simi Valley and Moorpark.

Even though the real estate correction has hit the county hard, it doesn't seem to have manifested in an extraordinary incidence of homeowner defaults, partly because there hasn't been as much new housing, said Mark Schniepp, director of the California Economic Forecast Project in Goleta.

There's been proportionately less new housing compared to Riverside, San Bernardino, Antelope Valley, Kern Valley and Santa Maria Valley, he said.

"The coastal areas will feel pain, but it won't be as intense as the Inland Empire," Kyser said.

Kyser calls San Diego the state's "problem child" because of its huge burst of condominium development. The sector's job growth has slowed considerably because of layoffs in the finance and construction fields, he said.

Ventura County's future is far from bleak, supported by an otherwise healthy economy with positive job growth and low unemployment.

"It's a scary situation, and it would be horrifying if your economy is struggling, but your local economy is doing well," Kyser said.