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California’s New Foreclosures Fall to Lowest Level in Over Three Years

The number of California homes going into foreclosure dropped during the fourth quarter of 2010 to its lowest level in more than three years.
[IMAGE] According to San Diego-based ""DataQuick Information Systems"":http://dataquick.com/, 69,799 Notices of Default (NoDs) were recorded during the three-month period, down 16.2 percent from the prior quarter and down 17.5 percent from the fourth quarter of 2009.

Last quarter's activity was the lowest since second quarter 2007, the local tracking firm said.

""We don't know how much of the decline is due to less household financial distress and how much is due to shifts in lender and servicer foreclosure policies,"" said John Walsh, DataQuick president. ""The level of default activity would certainly be higher if it weren't for alternative strategies such as short sales or even lengthening grace periods.""

Walsh continued, ""The institutions that hold these loans in their portfolios will do whatever it takes to lessen their losses, including waiting. An additional factor is all the turbulence when it comes to the formalities of the foreclosure process.""


California's priciest ZIP codes saw mortgage defaults rise slightly quarter-to-quarter and fall less on a year-over-year basis than the overall market.

The state's 82 ZIP codes with median sale prices of $800,000 or more in 2010 logged a 2 percent quarter-to-quarter increase in default notices and a 9.3 percent year-over-year decline.

ZIPs with 2010 medians of $200,000 or less saw fourth-quarter defaults drop 22.2 percent from the prior quarter and drop 19.5 percent from a year ago. But defaults still remain much higher in lower-cost areas.

Last quarter, ZIPs with medians of $200,000 or less collectively saw 11.3 default notices filed per 1,000 homes, compared with just 2.8 default notices filed per 1,000 homes in ZIPs with $800,000-plus medians and 8 filed per 1,000 homes for all ZIPs statewide.

According to DataQuick, mortgages were least likely to go into default in San Francisco, Marin, and San Mateo counties. The probability was highest in Madera, San Joaquin, and Stanislaus counties, which is consistent with the historical norm.

Foreclosure resales accounted for 37.5 percent of all California resale activity last quarter, up from 35.5 percent the prior quarter but down from 40.6 percent a year ago.

Foreclosure resales varied by county last quarter, from 11.3 percent in San Francisco County to 57.4 percent in Merced County.

Of the 282,643 homes foreclosed on statewide in an 18-month period ending September 2010, about 77 percent were resold, DataQuick reports. A year ago, it was about 85 percent.

About Author: Heather Cernoch


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