"Clearly it's bad news, but we know what's going on," said Esmael Adibi, an economist at Chapman University. "When we started going through this problems with housing, everything was concentrated on subprime mortgages."
Experts said the foreclosure problem used to be linked more to lax lending standards, but now it has more to do with high unemployment - more than 12% in California as well as a slow economy.
Homeowners with good credit, who took out conventional fixed-rate loans are the fastest growing group of foreclosures, experts said.
"You're talking about people who could have afforded making that monthly payment if they had income, but they have lost their job," Adivi said. "Unemployment is rising and job creation is very anemic."
While lenders try to help some homeowners modify their loans, experts said many borrowers can't qualify or are falling back into default.
"The sad thing is, I know a lot of people, like a friend of mine, who lost their job and lost their home," said Eddie Ayyoub, an Orange resident. "They have to give their home back because they can't afford the payment."
Experts expect house values will go down with the prospect of lenders taking over more than 1 million homes this year.
California joins Nevada, Arizona and Florida as states with the top 10 highest percentage rates of foreclosures.
Some economists said the foreclosure problem will be around for at least the next year and a half.