(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
