DataQuick: California Q3 Foreclosure Activity Lowest Since Early 2007

by 17 Oct 2012

(Dataquick) -- La Jolla, CA.—Three and a half years after peaking, the number of California homes entering the foreclosure process fell last quarter to the lowest level since the early stages of the housing bust. Mortgage default filings hit their lowest point since first-quarter 2007, due in large part to a stronger economy and housing market and more short sales, a real estate information service reported.

     A total of 49,026 Notices of Default (NoD) were recorded on residential properties during the third quarter. That was down 10.2 percent from 54,615 for the prior three months, and down 31.2 percent from 71,275 in third-quarter 2011, according to San Diego-based DataQuick.

     Last quarter’s number was the lowest since 46,760 NoDs were recorded in first-quarter 2007. NoDs peaked in first-quarter 2009 at 135,431. DataQuick’s NoD statistics go back to 1992.

     “A foreclosure happens when a homeowner owes more on the property than the property’s worth. Otherwise it could be sold and the mortgage paid off. So foreclosures go up when home values go down. Prices in most areas today are up significantly from their low point in early 2009,” said John Walsh, DataQuick president.

     “Additionally, during the past year, we’ve seen short sales overtake the foreclosure process as the procedure of choice to deal with homeowner distress. That may change after New Year’s because the temporary ‘debt forgiveness” feature in the tax code is set to expire as part of the so-called ‘fiscal cliff’,” he said.

     The median price paid for a California home last quarter was $300,000, which was 32.2 percent off the $227,000 bottom in first-quarter 2009, DataQuick reported.

     Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 26.0 percent of statewide resale activity last quarter. That was up from an estimated 24.0 percent the prior quarter and up from 22.9 percent of all resales a year earlier. The estimated number of short sales last quarter rose 19.0 percent from a year earlier.

     Foreclosure resales accounted for 20.0 percent of all California resale activity last quarter, down from a revised 27.8 percent the prior quarter and 34.2 percent a year ago. The figure peaked at 57.8 percent in the first quarter of 2009. The level of foreclosure resales – homes foreclosed on in the prior 12 months – varied significantly by county last quarter, from 5.5 percent in San Francisco County to 35.5 percent in Sutter County.

     NoD filings fell last quarter across all home price categories. But mortgage defaults remained far more concentrated in California's most affordable neighborhoods. Zip codes with third-quarter 2012 median sale prices below $200,000 collectively saw about 8 NoDs filed for every 1,000 homes in those zip codes, while the ratio was about 5 NoDs filed per 1,000 homes for zip codes with $200,000 to $800,000 medians. For the group of zip codes with median sale prices above $800,000, there were just under 2 NoDs filed per 1,000 homes.

     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 three years, indicating that weak underwriting standards peaked then.

     The most active “beneficiaries” in the formal foreclosure process last quarter were Bank of America (8,061), JP Morgan Chase(6,713) and Wells Fargo (5,780).

     The trustees who pursued the highest number of defaults last quarter were ReconTrust Co (mostly for Bank of America and Bank of New York), Quality Loan Service Corp (Bank of America) and NDEx West (Wells Fargo).

     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 $16,414 on a median $315,000 mortgage.

     On home equity loans and lines of credit in default, borrowers owed a median $4,779 on a median $78,804 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. Notices of Default are recorded at county recorders offices and mark the first step of the formal foreclosure process.

     Although 49,026 default notices were filed last quarter, they involved 48,257 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 San Francisco, San Mateo and Santa Clara counties. The probability was highest in Madera, Riverside and Yuba counties.

     On average, homes foreclosed on last quarter took 7.9 months to wind their way through the formal foreclosure process, beginning with an NoD. That’s up a tad from an average of 7.7 months the prior quarter and down from 9.9 months a year earlier. 

     Trustees Deeds recorded (TDs), or the finalized loss of a home to the formal foreclosure process, totaled 22,949 during the third quarter. That was up 5.0 percent from 21,851 for the prior quarter, and down 41.0 percent from 38,895 for third-quarter 2011. 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.

     Just as with mortgage default filings, foreclosures remained far more concentrated in the state's most affordable neighborhoods. Zip codes with third-quarter 2012 median sale prices below $200,000 collectively saw 4.8 homes foreclosed on for every 1,000 homes in existence. That compares with 2.0 foreclosures per 1,000 homes for zip codes with medians from $200,000 to $800,000, and less than one foreclosure per 2,000 homes in the group of zip codes with over-$800,000 medians.

     While 1.48 million of California's roughly 8.71 million houses and condos have been involved in a foreclosure proceeding the past five years, 847,067 have gone through the whole foreclosure process. The other 633,000 were either sold, or the payments were brought current.

     At formal foreclosure auctions held statewide last quarter, an estimated 39.4 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 39.2 percent the previous quarter and up from 31.0 percent a year earlier, DataQuick reported.

 

 

(chart)

 

Notices of Default (Trustees Deeds further down)

Houses and condos

                                                

County/Region             2011Q3     2012Q3     Yr/Yr%

 

Los Angeles               14,367     10,064     -30.0%

Orange                     4,817      3,255     -32.4%

San Diego                  5,048      3,727     -26.2%

Riverside                  6,923      5,032     -27.3%

San Bernardino             5,504      4,308     -21.7%

Ventura                    1,535      1,090     -29.0%

Imperial                     360        196     -45.6%

Socal                     38,554     27,672     -28.2%

 

San Francisco                472        257     -45.6%

Alameda                    2,654      1,555     -41.4%

Contra Costa               3,022      1,822     -39.7%

Santa Clara                2,176      1,236     -43.2%

San Mateo                    908        506     -44.3%

Marin                        295        241     -18.3%

Solano                     1,406        918     -34.7%

Sonoma                       896        597     -33.4%

Napa                         263        152     -42.2%

Bay Area                  12,092      7,284     -39.8%

 

Santa Cruz                   310        217     -30.0%

Santa Barbara                590        426     -27.8%

San Luis Obispo              418        260     -37.8%

Monterey                     643        422     -34.4%

Coast                      1,961      1,325     -32.4%

 

Sacramento                 4,351      2,766     -36.4%

San Joaquin                1,933      1,313     -32.1%

Placer                       998        695     -30.4%

Kern                       1,989      1,343     -32.5%

Fresno                     2,031      1,416     -30.3%

Madera                       368        258     -29.9%

Merced                       619        415     -33.0%

Tulare                       868        636     -26.7%

Yolo                         301        233     -22.6%

El Dorado                    459        284     -38.1%

Stanislaus                 1,491        938     -37.1%

Kings                        245        193     -21.2%

San Benito                   141         75     -46.8%

Yuba                         219        130     -40.6%

Colusa                        39         32     -17.9%

Sutter                       244        143     -41.4%

Central Valley            16,296     10,870     -33.3%

 

Mountains*                   742        607     -18.2%

 

North Calif*               1,630      1,268     -22.2%

 

Statewide*                71,275     49,026     -31.2%

 

*Includes other counties

 

 

 

 

Trustees Deeds Recorded

Houses and condos

                                               

 

County/Region              2011Q3      2012Q3     Yr/Yr%

 

Los Angeles                6,453      3,652     -43.4%

Orange                     1,898      1,007     -46.9%

San Diego                  2,460      1,456     -40.8%

Riverside                  4,229      2,612     -38.2%

San Bernardino             3,419      2,360     -31.0%

Ventura                      669        408     -39.0%

Imperial                     234        132     -43.6%

Socal                     19,362     11,627     -39.9%

 

San Francisco                162        112     -30.9%

Alameda                    1,357        674     -50.3%

Contra Costa               1,708        931     -45.5%

Santa Clara                  915        418     -54.3%

San Mateo                    352        146     -58.5%

Marin                        131         55     -58.0%

Solano                       910        518     -43.1%

Sonoma                       493        304     -38.3%

Napa                         114         66     -42.1%

Bay Area                   6,142      3,224     -47.5%

 

Santa Cruz                   174         99     -43.1%

Santa Barbara                290        184     -36.6%

San Luis Obispo              246        123     -50.0%

Monterey                     368        173     -53.0%

Coast                      1,078        579     -46.3%

 

Sacramento                 2,867      1,544     -46.1%

San Joaquin                1,252        773     -38.3%

Placer                       533        302     -43.3%

Kern                       1,264        840     -33.5%

Fresno                     1,468        854     -41.8%

Madera                       279        145     -48.0%

Merced                       446        221     -50.4%

Tulare                       613        421     -31.3%

Yolo                         233        103     -55.8%

El Dorado                    277        135     -51.3%

Stanislaus                 1,003        596     -40.6%

Kings                        144        103     -28.5%

San Benito                    69         37     -46.4%

Yuba                         147         85     -42.2%

Colusa                        29         27      -6.9%

Sutter                       134         81     -39.6%

Central Valley            10,758      6,267     -41.7%

 

Mountains*                   477        394     -17.4%

 

North Calif*               1,078        858     -20.4%

 

Statewide*                38,895     22,949     -41.0%

 

*Includes other counties

 

 

Source: DataQuick, DQNews.com

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