Report: Foreclosures Drop Off In California

January brought an unexpected, across the board drop, in the total Notices of Default, Notices of Trustee Sale, and sales at auction in California, not only from the prior month, but year-over-year as well, according to a report released by ""ForeclosureRadar"":http://www.foreclosureradar.com on Thursday.
Housing and default activity in California is often used by analysts and experts as a barometer for measuring the state of the overall housing market, and ForeclosureRadar tracks every foreclosure in the Golden State, providing daily auction updates on foreclosure property sales.
Based on ForeclosureRadar's data, California's Notices of Default decreased 11.8 percent over Notices recorded for December and are down 10.6 percent from January 2008. Due to the fact that January had two fewer recording days then December the average daily decrease was 3 percent.
The average daily volume for Notices of Trustee Sale filed in California from December to January decreased 8.3 percent, with a month-over-month total decline of 16.6 percent and an annual decline of 4.5 percent, ForeclosureRadar reported.
California properties taken to sale at auction decreased 6.0 percent from December to January, the foreclosure tracking company said. That's a 23.1 percent decline from the same period last year and a 46.8 percent decrease from peak volumes seen in July 2008. The 15,314 properties sold at auction represent $6.8 billion in loan value. Slightly more than 94 percent of these properties were sold back to the bank at auction, ForeclosureRadar said.
Analyzing the data at the lender level, ForeclosureRadar said it appears these drops can be primarily attributed to the significant changes taking place among the country’s major lending institutions.
Wells Fargo, with its recent acquisition of Wachovia, saw a drop in Notice of Default filings of 46 percent, while JP Morgan, which acquired Washington Mutual, saw a drop of 49 percent, ForeclosureRadar reported. However, Bank of America, which acquired Countrywide, saw a significant 281 percent increase in filings, though still below the levels Countrywide experienced in the second quarter of 2008. ForeclosureRadar said that given the significant integration issues faced by most major lenders today, it would be ""irresponsible to draw any conclusions about market direction from current foreclosure numbers.""
ForeclosureRadar noted that auction investment opportunities continue to abound in California and that the number of properties sold to third parties at auction is on the rise. The January statistic is up 6.6 percent from December 2008, more than doubling from January of last year. ForeclosureRadar pointed out that lender discounts at auction statewide averaged 41.4 percent from the outstanding loan balance for January, a significant increase from the 16.1 percent average discount a year earlier. Overall, lenders discounted their opening bid on 92 percent of properties taken to sale, making prices at auction reasonable for third-party buyers, the company explained.
Sean O'Toole, founder of ForeclosureRadar, said, ""Foreclosure is currently the only functioning mechanism for clearing the negative equity that is otherwise leaving homeowners in a prison of debt. While it is our hope that better mechanisms for clearing unsustainable mortgage debt are ultimately identified, we are delighted to see continued improvements in the efficiency of California’s foreclosure marketplace as evidenced by the increasing number of sales to third parties at auction.""