California Foreclosure Activity Lowest Since Early 2007

By Scot Campbell– Source:  Dataquick – 10/17/2012

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 aCaliforniahome 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 allCaliforniaresale 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 inSan FranciscoCountyto 35.5 percent inSutterCounty.

NoD filings fell last quarter across all home price categories. But mortgage defaults remained far more concentrated inCalifornia’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,Californiahomeowners 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 inSan Francisco,San MateoandSanta Claracounties. The probability was highest inMadera,Riversideand 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 ofCalifornia’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.

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 additional counties

Trustees Deeds Recorded (number of homes foreclosed on)
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                    

9,362 

    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           

0,758 

     6,267  

   -41.7%

 

 

 

 
Mountains*               

  477 

       394  

   -17.4%

 

 

 

 
North Calif*             

1,078 

       858  

   -20.4%

 

 

 

 
Statewide*               

8,895 

    22,949  

   -41.0

 

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