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Lending institutions started formal foreclosure proceedings on fewer California homes last quarter. San Diego-based ""MDA DataQuick"":http://www.dataquick.com reported this week that a[IMAGE]
total of 81,054 notices of default, which mark the first step in foreclosure proceedings, were filed at county recorder offices during the January-to-March period.
That was down 4.2 percent from 84,568 for the prior quarter, and down 40.2 percent from 135,431 in the first quarter of 2009. The year-ago number is the highest in DataQuick's statistics, which go back to 1992.
So has the Golden State finally turned the corner on its debilitating foreclosure crisis? The real estate monitoring and information firm says it's still unclear how much of the drop can be attributed to shifts in market conditions, and how much is the result of policy changes in the mortgage space.
""Several factors are at play here and it's hard to know how they play into each other right now,"" said John Walsh, DataQuick president. ""A year-and-a-half ago the subprime loan mess was the black hole. Now, playing catch-up, is the financial distress households are experiencing because of the recession. Add to the mix shifting policy decisions, both by lending institutions and in public policy.""
Walsh added, ""We are seeing signs that the worst may be over in the hard-hit entry-level markets, while problems are slowly spreading to more expensive neighborhoods. We're also seeing some lenders become more accommodating to workouts or short sales, while others appear to be getting stricter about delinquencies. It's very noisy out there.""
[COLUMN_BREAK]California's most affordable sub-markets, which represent 25 percent of the state's housing stock, accounted for 47.5 percent of all default activity a year ago. In the first quarter of 2010 that share fell to 40.9 percent.
The state's mid- to high-end housing markets, on the other hand, experienced an increase in mortgage defaults. For example, zip codes statewide with median home sale prices of $500,000-plus saw defaults buck the overall trend and rise 1.5 percent compared with the prior quarter.
In zips with medians below $500,000, mortgage default filings fell 5.8 percent from the prior quarter and declined nearly 43 percent from a year earlier.
Following a historical pattern, DataQuick says mortgages were least likely to go into default in Marin, San Francisco, and San Mateo counties. The probability was highest in Merced, Stanislaus, and San Joaquin counties.
According to DataQuick, it's loans made in the latter part of 2006 that are proving to be the most troublesome. The lenders that originated the most loans that went into default last quarter were Countrywide (7,282), World Savings (6,459), Washington Mutual (6,371), Wells Fargo (5,204), and Bank of America (3,851). These were also the most active lenders in the second half of 2006.
However, most of the loans made in 2006 are now owned or serviced by institutions other than those that made the loans. The servicers pursuing the highest number of defaults last quarter were ReconTrust Co., Cal-Western Reconveyance, and NDEx West, MDA DataQuick reported.
The number of trustees deeds recorded in California, which reflect the number of homes lost to the foreclosure process, totaled 42,857 during the first quarter. That was down 16.1 percent from 51,060 for the prior quarter, and down 1.7 percent from 43,620 a year ago.
DataQuick reported that on average, homes foreclosed on last quarter spent 7.5 months winding their way through the formal foreclosure process, beginning with a notice of default. A year ago it was 6.8 months. The company says the increase reflects lender backlogs and extra time needed to pursue possible loan modifications and short sales.
Foreclosure resales accounted for 42.6 percent of all California resale activity last quarter, with 24.6 percent of those going to investors at foreclosure auctions.
