RENO -- A new report by a California tracking firm said Nevada had the nation's second-highest foreclosure rate in December.

The report by RealtyTrac found that there was one foreclosure for every 392 households in the Silver State, second only behind Colorado. The national average was one in 1,055 homes, the report said.

The report also found a wide disparity between Northern Nevada and Southern Nevada.

According to the report, Washoe County had 32 homes, one for every 4,498 households, in some stage of foreclosure in December, about four times better than the national average for that month.

By contrast, Clark County had 2,163 homes, one in 277 households, in foreclosure in December.

"Much of the buying in Southern Nevada was by people that were going to not occupy the house, and they fully expected to flip the house (once it was built)," said Thomas Powell, CEO of Reno-based lender IntoHomes Mortgage Services and chairman of the Nevada Mortgage Advisory Council.

"When it came time to actually put the mortgage in there, they had hoped to have the house sold. And that didn't happen this go-around when it had been happening year after a year for a period of a time."

Powell said those types of investor-buyers are the top candidates to fall into default. Such buyers aren't as prevalent in Northern Nevada, he said.

"One, it's a much smaller market," he said. "Two, we think the builders up here did a good job of pushing down the speculative buyer pretty early on in the push."

Northern Nevada builders have slowed their building, which has helped limit the rise in the foreclosure rate, said Thomas Vetica, operations specialist in the Reno office of the U.S. Department of Housing and Urban Development.

"Both markets, the housing appreciation rates went really high," Vetica said. "We just cooled, and the developers just stopped building."

Nationally, the foreclosure rate has risen because the overall housing market has cooled as interest-only and adjustable-rate mortgages have matured, making the monthly payment for mortgages more expensive as interest rates move higher.

"You're going to see an increase of homes going into foreclosure," Tony Silva of Realty One Group in Las Vegas said. "Think about it. When was the (housing) peak? It was 2004. People bought with 100 percent interest-only and three-year ARMs (adjustable-rate mortgages).

"The only way to refinance is come up with the difference between what they owe and what the current appraised value is. You're going to see more short sales. It's going to be a strange market this upcoming year.

In a statement, RealtyTrac CEO James Saccacio said: "New foreclosure filings surpassed the 100,000 level for the fifth straight month, something we've not seen since we began issuing our foreclosure market report in January 2005.

"While the number of new foreclosure filings dropped back from the high point of 2006 in November, the combination of slower home sales and rising interest rates on adjustable mortgages continues to drive foreclosures at significantly higher numbers than a year ago," Saccacio said.

Silva said he recently taught a class for Realtors on bank-owned properties, explaining preforeclosure procedures and where agents should spend their time.

"Agents say, 'My clients want to buy a foreclosure.' No they don't. They just think they do," Silva said. "But the problem with a foreclosure is even if you get through to these people (home owners), they don't answer the door, they don't answer calls. You mail them something and they throw it away. What are you going to do? You can play Columbo and sit outside their house. They're going to laugh at you and say, 'Are you kidding? I've got $60,000 equity.' It's the same thing they say when their home is auctioned off on the courthouse steps."

Dennis Smith of Home Builders Research in Las Vegas said everyone started talking about foreclosures a couple of years ago, but he's not convinced it's a problem here. Whenever a housing market goes through ups and downs like Las Vegas has, foreclosures will increase, he said.

"Who's buying these homes? I've talked to investors who buy foreclosures and I had a guy say he can't find any deals here so he turned to other areas like South Dakota, I think it was," Smith said. "There are no steals. I just don't hear somebody say, 'You should've seen this deal I picked up in a foreclosure.'"

Review-Journal writer Hubble Smith contributed to this report.