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Michelle and Dennis Kogler moved to Visalia in September 2005 from Colorado.

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Dennis Kogler had a new job here.

It was the height of the real estate boom and the Koglers bought a new home for $376,000.

Six months later, as they noticed that similar homes in the neighborhood were selling for $125,000 less, plus incentives, Dennis Kogler decided to accept another job in northern California.

That's when the Koglers got into trouble.

They tried for 18 months to sell the home while Michelle Kogler remained in Visalia. The real estate market was bad and they were faced with selling at a loss. They had two sets of living expenses.

"We bought the home at an inflated price and it dropped to the point where we were immediately losing money," Michelle Kogler said. "It was a disaster."

The Koglers aren't alone.

For real estate professionals, increasing default notices are an early warning sign that escalating numbers of foreclosures are on the way.

And as the real estate market in Tulare County keeps tumbling, the number of default notices has skyrocketed, from 623 in 2005 to 1,165 in 2006 and 864 in the first half of this year.

Susan Welch, a loan officer for Resource Lenders in Visalia, said lenders typically send default notices when a homeowner misses at least three mortgage payments.

Lenders sent California homeowners the highest number of default notices in more than a decade in the last quarter, the result of flat or falling prices, anemic sales and a market struggling with excesses of the 2004-05 home buying, according to DataQuick Information Systems, a La Jolla-based real estate information service.

The time between default notice and foreclosure can be as short as six months, although foreclosure is not inevitable.

Some homeowners who get default notices will be able to sell their homes or work out a deal with their lenders; others will lose their homes to foreclosure. From April to June, that's what happened to 142 homeowners in Tulare County, compared to 17 in the same period last year — a 735 percent increase.

While the rapidly increasing number of default notices may seem high, it's

not, historically, for Tulare County.

Between 1997 and 2003, the average annual number of default notices in Tulare County was more than 2,400.

Visalia real estate broker Brad Maaske said what's happening now is that the number of default notices and foreclosures is falling back in line.

"We just came off the biggest market we've ever experienced in real estate," Maaske said. "What's stupid is we had the lowest interest rates in 40 years and people took a variable rate loan because they thought it would get lower."

According to DataQuick, most of the loans that went into default last quarter originated between January 2005 and February 2006.

Experts say the reasons for missed payments and default notices vary from medical issues and lost jobs to poor choices in loans to refinancing at the wrong time.

Maaske said some home purchases during the 2004-05 home buying frenzy were destined for foreclosure.

"Some bought homes and never moved in because the value of the home fell immediately," Maaske said. "It caught a lot of people off guard."

Maaske said some longtime homeowners put themselves in a bind because they refinanced with adjustable rate loans, which offered low interest rates for several years, then inflated to the point where they couldn't make their monthly payments.

"For some, it was just bad financial management," Maaske said.

That bad financial management has left some homeowners in default.

During the default period, the homeowner can try to keep the home by refinancing or selling. If that doesn't work, potential investors, for example, can buy the home and assume the loan. If all else fails, the lender ultimately repossesses the property and resells it to recoup the loan.

That's what happened to the Koglers.

"We couldn't get rid of that home to save our lives," Michelle Kogler said.

Finally, she said, she got homesick, left Visalia and rejoined her husband.

"It financially ruined us," Kogler said. "It will take us years to recover."

At the steps of Tulare City Hall Monday, the Koglers' home was put up at public auction. It didn't sell, and the lender took it, adding to a portfolio that will eventually have to be placed on an already depressed housing market, where, according to DataQuick, home prices have fallen at the rate of 1 percent a month.

For homeowners in Tulare County, the steps at Tulare City Hall are the end of the road. That's where some bargain-hungry house hunters have turned to feast on the growing pool of foreclosures.

At 2 p.m. every weekday, auctioneers are there to try to sell foreclosed homes.

They use Tulare City Hall because of its access to Highway 99: It's easier for buyers from Southern California.

Carlos Lopez, 23, of Visalia knows all about it.

Lopez had his sights set for months on a defaulted home on West Dorothea Avenue in Visalia. He discovered the home on a foreclosure Web site. It had last sold for $130,000 in 2002. He and his mother drove to the neighborhood a few times to see if the home had investment potential — make improvements, then sell it at a profit.

"We just thought it was a good time to look for property," Lopez said.

He and his mother bought the house Monday at the auction, after a bid war with another potential buyer, for $25,000.

# The reporter can be reached at jchernab@visalia.gannett.com.