Notice of defaults, which represent the start of the foreclosure process in California, increased by 19.7 percent in February, according to new data released this week by a locally-based company that tracks every foreclosure in[IMAGE]the state. The sudden jump comes after four straight months of declines, when default notices fell to their lowest level in a year. The about-face has quickly quelled any ideas that California might be starting to make its way out of a crippling housing crisis.
Discovery Bay-based ""ForeclosureRadar"":http://www.foreclosureradar.com also reported that the number of properties scheduled for foreclosure sale remained near record levels last month, yet foreclosure sales, either back to the bank or sold to third parties, dropped by 11.9 percent.
""The disconnect between delinquencies, and foreclosure sales continues to widen,"" said Sean O'Toole, founder and CEO of ForeclosureRadar.
O'Toole says the administration's efforts to slow foreclosures are clearly contributing to delays in the process and prolonging the sale timeline, and he faults foreclosure prevention initiatives for not addressing what he calls ""the core problem"" Ã¢â‚¬" negative equity that now plagues about 25 percent of homeowners in the United States with a mortgage.[COLUMN_BREAK]
Last month, ForeclosureRadar tracked 31,004 notices of default filed in the Golden State, up nearly 20 percent compared to the previous month. Notices of trustee sale, which set the date and time of the foreclosure auction, increased slightly as well, rising 3.6 percent to 28,195 filings.
O'Toole says he's been expecting to see a wave of foreclosure cancellations since the administration began its push to increase the number of permanent loan mods under the Home Affordable Modification Program (HAMP). But he says cancellations remained flat last month.
""We take this as a clear indication that the administration's drive to make trial loan modifications permanent is failing,"" O'Toole said. ""Instead one of the primary reasons for foreclosure cancellations at this point appears to be the fact that the lender has run out of time, as foreclosures can only be postponed for one year before the notice of trustee sale has to be re-filed.""
ForeclosureRadar says properties exiting the foreclosure process last month nearly matched the number of new notice of trustee sale filings, leaving the number of properties scheduled for sale in February flat compared to January. Courthouse steps in the Golden State are growing highly competitive. The firm reported that discounts for properties sold at foreclosure auction dropped from 17.5 percent in January to just 15.2 percent below market value in February.
Despite fewer foreclosure sales overall in February, as well as smaller discounts due to competitive bidding, third-party investors purchased more foreclosures, at 23.2 percent, than at any other time since ForeclosureRadar began tracking trustee sales in September 2006. The company also noted that banks continue to resell their California REO properties in a timely manner, with their inventories flat from January to February.