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California Foreclosure Sales Soar in March

California foreclosure sales increased on both a year-over-year and month-to-month basis in March, according to the monthly ""California Foreclosure Report"":https://s3.amazonaws.com/CA_Foreclosure_Report/March+2010+CA+Foreclosure+Report.pdf recently released by ""ForeclosureRadar"":http://www.foreclosureradar.com/, a Discovery Bay, California-based company that tracks every foreclosure in The Golden State.


During March of last year most major lenders had voluntary foreclosure moratoriums in place while awaiting the implementation of the administration's Home Affordable Modification Program. One year later, those moratoriums were long gone. As a result, California foreclosure sales in March 2010 increased 92.3 percent from the same month in 2009.

Compared to February of this year, foreclosure sales increased 24.2 percent. Of these, 79.2 percent went back to bank, and the remainder sold to third parties, primarily investors.

""The increase in foreclosure sales will likely come as a surprise to many given all the recent news about foreclosure alternatives like short sales, and new loan modifications with principal balance reductions,"" said Sean O'Toole, founder and CEO of ForeclosureRadar. ""The simple reality is that these programs won't help everyone and that foreclosures continue to be a very effective way of eliminating negative equity, even if it is the choice of last resort.""

O'Toole said the increase in sales does not indicate an increase in the speed of foreclosures. Rather, he said the time it takes to foreclose rose slightly. O'Toole explained that there are signs that the foreclosure timeframe will likely increase further in the coming months given the delay seen in notice of trustee sale filings -- up month-over-month from 142 days to 188 days.

Although sales increased, notice of default filings dropped substantially in March from the prior year. Last year, filings reached record levels when lenders caught up on a


backlog of filings after delays caused by new notice requirements introduced in the California Senate Bill 1137. However, notice of default filings inched up 3.75 percent from February. In addition, notices of trustee sales increased 17.5 percent from the previous month but fell 3.1 percent from the same month last year.

As for foreclosure outcomes, third party purchases at foreclosure sales hit a new record in March, crossing 4,000 properties for the first time with combined purchases totaling more than $840 million. Third party sales jumped 11.04 percent from February and surged 266 percent from a year ago.

In addition, a total of 15,204 California foreclosures went back to bank in March, up 28.14 percent from the month before and 66.33 percent higher than March 2009. And 16,513 foreclosure cancellations were recorded, a 20.21 percent jump from February and a 159.97 percent increase from the same month last year.

ForeclosureRadar said the increase in cancellations appeared to be primarily driven by filing errors, as indicated by an early cancellation, or by statutory requirement, as evidenced by the sale being postponed beyond the maximum time allowed under law. Still, more than half of these cancellations occurred mid-foreclosure, indicating a likely loan modification or short sale.

The discount from market value that third parties received on foreclosure sales increased slightly in March. At just 15.8 percent below market value, ForeclosureRadar said it is likely that banks have hit the limits of what they can extract from investors given the risks of purchasing at a trustee sale. For those properties that banks take back at foreclosure sale, the opening bid was an average of 31.3 percent higher than market value, clearly removing any possibility of an investor purchase.

The data on foreclosure inventories was mixed. There were an estimated 157,768 pre-foreclosure filings in March, up 12.59 percent from February but down 12.06 percent from a year ago.

Like February, properties exiting the foreclosure process nearly matched the number of new notice of trustee sale filings, leaving the number of properties scheduled for sale nearly flat on a month-to-month basis. However, the number of properties scheduled for sale was up 71.95 percent compared to March 2009.

While the number or properties going back to bank jumped in March, so did the resale of bank-owned properties. This left real-estate owned (REO) inventories almost unchanged from February to March. Compared to the same month last year, REO inventories were down 26.52 percent.

About Author: Brittany Dunn


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