Notices of default nearly double
The flames of the foreclosure wildfire leaped higher in December, with Notices of Default rebounding from the stall caused by a California law (Senate Bill 1137), which temporarily slowed foreclosures by imposing new requirements on lenders, according to a report by ForeclosureRadar Inc. of Discovery Bay, which says it tracks every California foreclosure with daily auction updates.
With 42,421 filings in December, Notices of Default are back to the record levels reached in the second quarter of 2008, nearly doubling the 21,557 Notices of Default recorded in November.
Notice of Trustee Sale filings were relatively flat month-over-month. However, Notices of Trustee Sale are filed an average 116 days after the Notice of Default so a rebound in the coming months is likely, says the report.
Once again, Merced County ranks highest in the number of homes going on the auction block per resident. There were 289 homes auctioned off in December 2008, or one for every 854 residents. It marks a 34 percent increase over a year earlier but a 14 percent decrease compared to November 2008, according to ForeclosureRadar’s figures.
In second place, on a per capita basis is tiny Colusa County where 24 homes went to auction or one for every 896 residents.
The rest of the top ten are familiar figures from month to month.
Third place is held by San Joaquin County with 724 homes auctioned off in December, up 34 percent from a year earlier but 12 percent under November.
Other Central Valley counties:
• 6th: Stanislaus County, 490 sales, up 27 percent from a year earlier
• 9th: Yuba County, 59 sales, up 23 percent
• 10th: Madera County, 119 sales, up 113 percent from 2009
• 11th: Kern County, 593 sales, up 49 percent
• 14th: Sacramento County, 994 sales, up 4 percent
• 21st: Fresno County, 412 sales, up 38 percent
• 30th: Yolo County, 67 sales, up 14 percent
• 31st: Tulare County, 146 sales, up 57 percent
• 32nd: Butte County, 71 sales, up 129 percent
• 37th: Kings County,37 sales, up 95 percent.
California saw unprecedented foreclosure activity in 2008, with 249,940 properties sold at trustee sale auction – representing $107.8 Billion in combined loan value.
Of those properties 96.4% went back to the lender after no bid was received from a third-party.
• There were a total of 437,955 Notices of Default filed in 2008, an increase of 56 percent over the 279,821 Notices of Default filed in 2007.
• Notice of Trustee Sale filings increased 122.9 percent over 2007 rising from 157,273 filings in 2007 to 350,514 filings in 2008. Of the Notices of Trustee Sale filed in 2008, 16 percent remain scheduled for sale at auction, 17 percent have been cancelled, and 66 percent were sold at auction.
• Properties sold at auction increased by 158 percent by volume, and 179 percent by combined loan value. Lenders took back a total of 241,093 properties, with a combined loan value of $103.9 Billion.
• The amount lenders discounted properties at auction from the outstanding balance increased from an average discount of 16.1 percent in January to 39.5 percent in December. In January only 3 percent of properties taken to auction were deeply discounted (bidding started at a discount of 50 percent or more from the loan balance). By December 40 percent of sales were deeply discounted.
• The time between the filing of a Notice of Default, and a property being sold at auction on the courthouse steps increased 19 days over the course of the year, to an average of 165 days in December.
In December, Notices of Default increased 100 percent over Notices recorded for November, to a total of 42,421 default filings, a 24.7 percent increase over December 2007, says ForeclosureRadar.
Notices of Trustee Sale, which set the auction date, time and location, were flat from November to December, with 27,497 filings, the report says. Notices of Trustee Sale for December represent a 29.8 percent year-over-year increase, but are still 30 percent below the peak levels reached in July of 2008.
Properties taken to sale at auction increased only slightly between November and December, to 16,298 sales statewide, a 72.6 percent increase from the same time last year. Third party purchases at trustee sale auction decreased 12.5 percent from November 2008, but were still 156 percent above third party purchases in December 2007.
Lenders took back nearly 95 percent of the 16,298 properties sold at auction last month, with a combined loan value of $8.95 billion.
“The effort by the California state Legislature to reduce foreclosures has now clearly failed,” says Sean O’Toole, founder of ForeclosureRadar. “While Senate Bill 1137 was well intentioned, forcing lenders to talk to homeowners won’t fix this problem.”
While a number of lenders have announced significant loan modification programs to reduce payments to affordable levels, these plans fail to address the fact that the average foreclosure in California now has $180,000 in negative equity, he says.
“Lowering payments may provide a temporary fix,” says Mr. O’Toole, “but lenders simply don’t have sufficient reserves to lower principal balances enough to help homeowners in foreclosure escape the prison of debt their home now represents.”
In December, the average estimated value of a home sold at foreclosure auction was $283,624, with an average total loan balance of $464,270. Of these, 60 percent had second mortgages for which little or no equity remained to secure their interest in the property. By not foreclosing, second mortgage holders often retain their ability to collect on loans even after their secured interest is wiped out by the foreclosure of a first mortgage.
Methodology
Rankings are based on population per foreclosure sale. NOD indicates the number of Notices of Default that were filed at the county, and NTS indicates filed Notices of Trustee Sale. Sales indicates the number of properties sold at foreclosure auction. Percentage changes are based on monthly sales. The data presented by ForeclosureRadar is based on county records and individual sales results from daily foreclosure auctions throughout the state – not estimates or projections.
