California Foreclosure Activity Back Up

by 18 Oct 2011
La Jolla, CA.—— After dropping to a three-year low in the second quarter of this year, the number of California homeowners being pulled into the foreclosure process snapped back to prior levels over the last three months, a real estate information service reported.      A total of 71,275 Notices of Default (NoDs) were recorded at county recorders offices during the third quarter. That was up 25.9 percent from 56,633 for the prior three months, and down 14.4 percent from 83,261 in third-quarter 2010, according to San Diego-based DataQuick.      Last quarter’s 71,275 NoDs, which mark the first step in the formal foreclosure process, jumped back to levels seen earlier this year and late last year. Lenders filed 68,239 NoDs during first-quarter 2011 and 69,799 in fourth-quarter 2010. NoDs peaked in first-quarter 2009 at 135,431.      “Figuring out what’s actually going on when it comes to foreclosures can be a logistical nightmare. In each case there are at least six or seven different legal entities contending with each other, each with a different agenda and timeline: The original lender, the homeowner, the current owner or owners of the loan, the servicing institution, the outfit doing the actual foreclosing, and the county recorder's office,” said John Walsh, DataQuick president.      “The way it looks right now, it's reasonable to expect default filings to run at a somewhat higher level than we saw earlier this year,” he said. “Obviously, some lenders and loan servicers have begun to plow through their backlogs of delinquent loans more aggressively.”       Most of the loans going into default are still from the 2005-2007 period: the median origination quarter for defaulted loans is still third-quarter 2006. That has been the case for almost three years, indicating that weak underwriting standards peaked then.      The most active beneficiaries in the formal foreclosure process last quarter were Bank of America (14,325), Bank of New York (11,052), and Wells Fargo (9,740).      The most active trustees, companies doing the actual foreclosing, last quarter were ReconTrust Co (mostly for Bank of America and Bank of New York), Quality Loan Service Corp (Bank of America), California Reconveyance Co (JP Morgan Chase), Cal-Western Reconveyance Corp (Wells Fargo) and NDEx West (Wells Fargo).      Defaults by price segment show that distress is not spread evenly, with lower-cost neighborhoods bearing the brunt. Last quarter, zip codes with year-to-date median sale prices below $200,000 collectively saw 11.0 default notices filed per 1,000 homes. That compares with 8.1 NoDs filed per 1,000 homes for all zip codes statewide, and just 2.8 NoD filings per 1,000 homes in zips with medians above $800,000.      Also, the state’s relatively large 25.9 percent, quarter-to-quarter rise in NoDs was just over double the magnitude of the increase for the group of zips with $800,000-plus medians. Combined, those pricier areas saw NoD filings rise 12.1 percent from the prior quarter.      On primary mortgages, California homeowners were a median eight months behind on their payments when the lender filed the Notice of Default. The borrowers owed a median $19,198 on a median $331,333 mortgage. The median amount borrowers owed at the time the NoD was filed rose about 17 percent from the prior quarter and 27.0 percent from a year earlier. The gains likely stem from some lenders working faster last quarter to get caught up on their backlogs of long-delinquent loans.       On home equity loans and lines of credit in default, borrowers owed a median $4,576 on a median $70,055 credit line. The amount of the credit line that was actually in use cannot be determined from public records.      San Diego-based DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.               Although 71,275 default notices were filed last quarter, they involved 70,554 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit).      Of the state’s larger counties, mortgages were least likely to go into default in Marin, San Francisco and San Mateo counties. The probability was highest in Sacramento, Madera and Stanislaus counties.      Trustees Deeds recorded (TDs), or the actual loss of a home to foreclosure, totaled 38,895 during the third quarter. That was down 8.4  percent from 42,465 for the prior quarter, and down 14.3 percent from 45,377 for third-quarter 2010. The all-time peak was 79,511 in third-quarter 2008. The state’s all-time low was 637 in the second quarter of 2005, DataQuick reported.      There are 8.7 million houses and condos in the state.      Foreclosure resales accounted for 34.2 percent of all California resale activity last quarter. It was 35.6 percent the prior quarter, and a year ago it was 35.5 percent. It peaked at 57.8 percent in the first quarter of 2009. Foreclosure resales varied significantly by county last quarter, from 92 percent in San Francisco County to 61.2 percent in Yuba County.      Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 17.8 percent of statewide resale activity last quarter. That was up slightly from an estimated 17.4 percent the prior quarter and 17.3 percent a year ago. Two years ago, in third quarter 2009, short sales made up an estimated 14.4 percent of resales.      On average, homes foreclosed on last quarter took 9.9 months to wind their way through the formal foreclosure process, beginning with an NoD. That's about even with 10 months in the prior quarter but up from 8.7 months a year earlier.       At formal foreclosure auctions held statewide last quarter, an estimated 29.7 percent of the foreclosed properties were bought by investors or others who don't appear to be lender or government entities. That was up from an estimated 28.3 percent the previous quarter and up from 22.7 percent a year earlier, DataQuick reported.   Media calls: Andrew LePage (916)456-7157   (chart)   Notices of Default (Trustees Deeds further down) Houses and condos County/Region           2010Q3     2011Q3    Yr/Yr%   Los Angeles             16,189     14,367    -11.3% Orange                   4,938      4,817     -2.5% San Diego                5,869      5,048    -14.0% Riverside                8,982      6,923    -22.9% San Bernardino           7,429      5,504    -25.9% Ventura                  1,643      1,535     -6.6% Imperial                   411        360    -12.4% SoCal                   45,461     38,554    -15.2%   San Francisco              483        472     -2.3% Alameda                  2,685      2,654     -1.2% Contra Costa             3,243      3,022     -6.8% Santa Clara              2,244      2,176     -3.0% San Mateo                  869        908      4.5% Marin                      313        295     -5.8% Solano                   1,677      1,406    -16.2% Sonoma                     954        896     -6.1% Napa                       222        263     18.5% Bay Area                12,690     12,092     -4.7%   Santa Cruz                 292        310      6.2% Santa Barbara              616        590     -4.2% San Luis Obispo            482        418    -13.3% Monterey                   717        643    -10.3% Coast                    2,107      1,961     -6.9%   Sacramento               5,251      4,351    -17.1% San Joaquin              2,451      1,933    -21.1% Placer                   1,200        998    -16.8% Kern                     2,654      1,989    -25.1% Fresno                   2,414      2,031    -15.9% Madera                     467        368    -21.2% Merced                     919        619    -32.6% Tulare                   1,064        868    -18.4% Yolo                       429        301    -29.8% El Dorado                  504        459     -8.9% Stanislaus               1,960      1,491    -23.9% Kings                      308        245    -20.5% San Benito                 129        141      9.3% Yuba                       282        219    -22.3% Colusa                      60         39    -35.0% Sutter                     282        244    -13.5% Central Valley          20,374     16,296    -20.0%   Mountains*                 869        742    -14.6%   North Calif*             1,760      1,630     -7.4%   Statewide*              83,261     71,275    -14.4%   *Includes other counties         Trustees Deeds Recorded Houses and condos   County/Region           2010Q3     2011Q3     %Chng   Los Angeles              7,049      6,453     -8.5% Orange                   2,006      1,898     -5.4% San Diego                3,132      2,460    -21.5% Riverside                5,428      4,229    -22.1% San Bernardino           4,353      3,419    -21.5% Ventura                    705        669     -5.1% Imperial                   307        234    -23.8% SoCal                   22,980     19,362    -15.7%   San Francisco              180        162    -10.0% Alameda                  1,404      1,357     -3.3% Contra Costa             1,909      1,708    -10.5% Santa Clara              1,036        915    -11.7% San Mateo                  375        352     -6.1% Marin                      138        131     -5.1% Solano                   1,045        910    -12.9% Sonoma                     539        493     -8.5% Napa                       131        114    -13.0% Bay Area                 6,757      6,142     -9.1%   Santa Cruz                 156        174     11.5% Santa Barbara              292        290     -0.7% San Luis Obispo            253        246     -2.8% Monterey                   474        368    -22.4% Coast                    1,175      1,078     -8.3%   Sacramento               3,114      2,867     -7.9% San Joaquin              1,606      1,252    -22.0% Placer                     627        533    -15.0% Kern                     1,752      1,264    -27.9% Fresno                   1,637      1,468    -10.3% Madera                     284        279     -1.8% Merced                     639        446    -30.2% Tulare                     727        613    -15.7% Yolo                       228        233      2.2% El Dorado                  300        277     -7.7% Stanislaus               1,375      1,003    -27.1% Kings                      174        144    -17.2% San Benito                  80         69    -13.8% Yuba                       189        147    -22.2% Colusa                      39         29    -25.6% Sutter                     163        134    -17.8% Central Valley          12,934     10,758    -16.8%   Mountains*                 498        477     -4.2%   North Calif*             1,033      1,078      4.4%   Statewide*              45,377     38,895    -14.3%   *Includes other counties

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