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Report: California Foreclosure Sales Drop

""ForeclosureRadar"":http://www.foreclosureradar.com, a website that is said to track every California foreclosure with daily auction updates, issued its ""California Foreclosure Report"":http://www.foreclosureradar.com/press_release_081013.php for October this week. Foreclosure sales dropped by 39.1 percent from the prior month, due to significant increases in cancellations and postponements, the company said.
Under California law, scheduled foreclosure sales can be postponed for a period of up to one year, until they are either canceled or sold. According to ForeclosureRadar, cancellations, where the home is taken out of foreclosure, increased by 78 percent in October, resulting in nearly 20 percent of foreclosure sales scheduled for the month being called off.
Notice of Default filings, which start the foreclosure process, continue to be significantly impacted by CA State Senate Bill 1137, as lenders work through the new requirements the law imposes, ForeclosureRadar said. Based on the company's data, however, Notices of Trustee Sale rebounded after a significant drop the prior month.
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A summary of ForeclosureRadar's findings include:%
- Notice of Default filings increased slightly in October, up 2.8 percent from September, to a total of 16,810 filings. Year over year, Notice of Default filings are down 42.3 percent.
- Notices of Trustee Sale, which schedule the auction date and time, increased by 32.9 percent in October, to 25,408 filings. Despite the significant increase, this level of filings remains well below average levels earlier this year, as September levels were clearly impacted by CA State Senate Bill 1137.
- Properties taken to sale at auction declined by 39.1 percent from September, to 14,042 sales, with a combined loan balance of $6.39 Billion. This represents a 28.8 percent increase from the prior year.
- Lenders took back 94 percent of the properties taken to auction, with a combined loan value of $9.19 Billion. Third party purchases declined 24 percent from the prior month, but increased 25 percent (as a percentage of all foreclosure sales), due to the decline in sales activity.
""It is important to note that the significant decline in October foreclosure sales cannot be directly attributed to CA State Senate Bill 1137,"" said Sean O'Toole, founder of ForeclosureRadar. ""There were nearly 60,000 properties scheduled for sale at the beginning of October over which the law had no affect. The drop in foreclosure sales, therefore, can only be reasonably attributed to changes introduced by the lenders themselves and not in response to SB 1137.""
The increase in cancellations was led primarily by Countrywide, ForeclosureRadar stated, which saw a 460 percent increase in cancellations from the prior month, and a 48 percent decline in the number of properties they sold at auction. ""In early October"":http://dsnews.comview_story.cfmxid=2974, Bank of America, which acquired Countrywide earlier this year, announced an aggressive loan modification program for Countrywide borrowers who financed their homes with subprime or pay option adjustable rate mortgages (ARMs).
Other lenders in California had similar drops in foreclosure sales, though more often due to postponement, rather than cancellation, ForeclosureRadar reported. Statewide, the percentage of foreclosure sales that had postponed at least once, increased from 36 percent of sales to 58 percent of sales, with the average length of postponement increasing from 24 days to 42 days.
""It would be a mistake to conclude that the declines in foreclosure activity indicate that the foreclosure crisis is over,"" O’Toole warned. ""While lenders now appear to be embracing the concept of foreclosure moratoriums and loan modifications, neither typically address the core issue of negative equity. Most loan modifications focus on lowering payments to affordable levels by using unsustainably low interest rates, not unlike the ‘teaser rates’ that many have blamed for the current crisis.""
Based on ForeclosureRadar's October data, average discounts offered by lenders on the outstanding loan balance at foreclosure auction declined slightly from prior months, and averaged 36.1 percent statewide, with 33 percent of properties taken to auction being offered at discounts of 50 percent or more.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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