Golden State Foreclosures Still Rising

""ForeclosureRadar"":http://www.foreclosureradar.com, which tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for February 2009 on Thursday. The company said that Notices of Default have increased 21.3 percent from January and have nearly returned to the peak levels reached in April 2008, despite the President’s Day holiday and February being a short month.
In addition, ForeclosureRadar found that properties sold at foreclosure auction (trustee sales) in the Golden State totaled 17,131 in February - an 11.9 percent increase from January. Perhaps even more disturbing than the numbers, is the fact that the average difference between current market value and outstanding loan amount exceeded $200,000 for properties sold at foreclosure auction in February. This represents a 189 percent increase in negative equity when compared to properties foreclosed on a year earlier, the foreclosure tracking company said.
Sean O’Toole, founder and CEO of ForeclosureRadar, said, ""Despite their unpopularity, foreclosures and short sales are currently the only mechanisms working to eliminate the negative equity now plaguing 30 percent of Californians. While prices have corrected to affordable levels in many parts of California, housing markets and the economy continue to suffer due to the unsustainable debt taken on during the housing bubble.""
California homes sold at auction in February represented a total $7.2 billion in loan value, ForeclosureRadar reported. While year-over-year foreclosure sales were up and properties sold to third parties at auction rose 223 percent compared to a year ago, lenders still took back 92.8 percent of the foreclosures for sale, representing $6.65 billion in loan value, the company said.
ForeclosureRadar said that nearly 99 percent of the loans foreclosed on in February were originally made between 2004 and 2007, with 46 percent having been made in 2006 alone. On average, these properties were 3 bedrooms, 2 baths and 1,589 square feet, with more built in 2005 than any other year, the company said.
Opening bids at California auctions were discounted an average of 36.3 percent from the outstanding loan balance, a decline of nearly 5 percent from the prior month, ForeclosureRadar said. Still, the company said, the number of properties that were discounted by 50 percent or more increased to 6,307 of the 17,131 taken to auction. The largest discounts were found in Monterey, San Benito, and San Joaquin counties, at over 46 percent, while San Francisco county continued to see the smallest discounts at 20 percent.
O’Toole said the state's deep auction discounts reflect the significant negative equity lenders and homeowners are facing, but they also offer opportunities for knowledgeable investors.