Despite state lawmakers’ efforts to curtail home losses, a record number of California foreclosures are now scheduled for sale – that’s according to a report released Tuesday by ForeclosureRadar, a local company that tracks every foreclosure in the Golden State and provides daily auction updates.
High-level findings of ForeclosureRadar’s July California Foreclosure Report include:
· Filings of new Notices of Default were little changed from June. A total of 44,996 default notices were filed during July, a 1.5 percent decrease. However, year-over-year filings rose by 11.9 percent from July 2008.
· Notice of Trustee Sale filings bounced back to 39,294 in July after dropping the previous month. The California Foreclosure Prevention Act, which adds 90 days prior to the filing of the Notice of Trustee Sale for lenders that do not have a loan modification plan in place, had only a fleeting impact last month. Notice of Trustee Sale filings hit their second highest level on record in July, just two weeks after the law took effect.
· After increasing for three consecutive months, foreclosure auction sales dropped by 22.7 percent to a total of 17,239, with a combined loan value of $8.08 billion dollars. Opening bids set by lenders were an average of 39.1 percent lower than the loan balance, with nearly half of sales discounted by 50 percent or more.
· Sales to third-party bidders were flat from June, with 2,683 foreclosures sold to investors, or in increasingly rare instances, junior lenders. As a percentage of total sales, those to third parties continued to increase, though lenders still took back 84.4 percent of foreclosures at auction, representing 14,555 loans with a total of $6.93 billion dollars in loan value.
· Foreclosures scheduled for sale rose to 124,874, a 10.4 percent increase from the prior month, and a 93.3 percent increase over the same time last year. The year-over-year gain is significant given that foreclosure sales in July 2008 set a record that has not again been reached.
“Despite the failure of the California Foreclosure Prevention Act to slow Notice of Trustee Sale filings it is clear that lenders and servicers are delaying foreclosure” said Sean O’Toole, founder and CEO of ForeclosureRadar. “More homeowners are now sitting at the brink of foreclosure, just days away from the next scheduled auction date than ever before, yet we simply aren’t seeing the wave of foreclosures many predicted.”
Political pressure, financial incentives, and the postponement of sales awaiting the completion of loan modification trial periods are likely reasons for the delays. The vast majority of foreclosures, 72 percent, are being delayed at the lender’s request or as mutual agreement between the lender and borrower. Only 10 percent are being postponed due to bankruptcy.
According to ForeclosureRadar’s report, the average California foreclosure has a total loan balance of $425,134 on a home that is now worth $236,739. While negative equity is a prerequisite for the vast majority of foreclosures in California, the degree of negative equity varies a great deal by location.
Foreclosures in Santa Cruz County had loan balances just 110 percent of the current estimated value, while in Merced County loan balances average 283 percent higher than the estimated value. The Bay Area counties of Santa Cruz, San Francisco, Marin, and San Mateo were among the least underwater during the month of July. Inland counties including Merced, San Joaquin, Stanislaus, Solono, Sacramento, San Bernardino, and Riverside were the most underwater.
High-level findings of ForeclosureRadar’s July California Foreclosure Report include:
· Filings of new Notices of Default were little changed from June. A total of 44,996 default notices were filed during July, a 1.5 percent decrease. However, year-over-year filings rose by 11.9 percent from July 2008.
· Notice of Trustee Sale filings bounced back to 39,294 in July after dropping the previous month. The California Foreclosure Prevention Act, which adds 90 days prior to the filing of the Notice of Trustee Sale for lenders that do not have a loan modification plan in place, had only a fleeting impact last month. Notice of Trustee Sale filings hit their second highest level on record in July, just two weeks after the law took effect.
· After increasing for three consecutive months, foreclosure auction sales dropped by 22.7 percent to a total of 17,239, with a combined loan value of $8.08 billion dollars. Opening bids set by lenders were an average of 39.1 percent lower than the loan balance, with nearly half of sales discounted by 50 percent or more.
· Sales to third-party bidders were flat from June, with 2,683 foreclosures sold to investors, or in increasingly rare instances, junior lenders. As a percentage of total sales, those to third parties continued to increase, though lenders still took back 84.4 percent of foreclosures at auction, representing 14,555 loans with a total of $6.93 billion dollars in loan value.
· Foreclosures scheduled for sale rose to 124,874, a 10.4 percent increase from the prior month, and a 93.3 percent increase over the same time last year. The year-over-year gain is significant given that foreclosure sales in July 2008 set a record that has not again been reached.
“Despite the failure of the California Foreclosure Prevention Act to slow Notice of Trustee Sale filings it is clear that lenders and servicers are delaying foreclosure” said Sean O’Toole, founder and CEO of ForeclosureRadar. “More homeowners are now sitting at the brink of foreclosure, just days away from the next scheduled auction date than ever before, yet we simply aren’t seeing the wave of foreclosures many predicted.”
Political pressure, financial incentives, and the postponement of sales awaiting the completion of loan modification trial periods are likely reasons for the delays. The vast majority of foreclosures, 72 percent, are being delayed at the lender’s request or as mutual agreement between the lender and borrower. Only 10 percent are being postponed due to bankruptcy.
According to ForeclosureRadar’s report, the average California foreclosure has a total loan balance of $425,134 on a home that is now worth $236,739. While negative equity is a prerequisite for the vast majority of foreclosures in California, the degree of negative equity varies a great deal by location.
Foreclosures in Santa Cruz County had loan balances just 110 percent of the current estimated value, while in Merced County loan balances average 283 percent higher than the estimated value. The Bay Area counties of Santa Cruz, San Francisco, Marin, and San Mateo were among the least underwater during the month of July. Inland counties including Merced, San Joaquin, Stanislaus, Solono, Sacramento, San Bernardino, and Riverside were the most underwater.
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