La Jolla, Calif.-It's been 6 years since the foreclosure crisis hit California and we're now seeing the lowest numbers of distressed borrowers since 2006. A leading industry service revealed this week that this latest trend is the result of rising home values, an improving economy and a shift toward short sales. Yet there's still trouble in the loan modification arena, Central Coast News reports on this at 10p Thursday night on Fox35 and Friday night at 6p on CBS46 in a Center for Investigative Action Report.
During fourth-quarter 2012 lenders recorded a total of 38,212 Notices of Default or NOD's on California houses and condos, which is the beginning of foreclosure proceedings. That was down 22.1 percent from 49,026 during the prior three months, and down 37.9 percent from 61,517 in fourth-quarter 2011, according to San Diego-based DataQuick.
Last quarter's number was the lowest since 37,994 NoDs were recorded in fourth-quarter 2006. New NOD's peaked in first-quarter 2009 at 135,431. DataQuick's NOD statistics go back to 1992.
John Walsh, President of Dataquick, says "Home values increased through most of 2012, and the rate of increase picked up toward the end of the year. That means fewer and fewer homeowners are underwater, where they owe more than their homes are worth. That in turn means they can sell and pay off the mortgage, or perhaps refinance at today's low interest rates. This trend alone suggests we'll see a continued decline in foreclosure rates this year. Another factor is the foreclosure-avoidance goals of various settlements between lenders and the government."
The median price paid for a home last quarter was $300,000 in California, up 22.4 percent from a year ago and 32.2 percent off the median's $227,000 bottom in first-quarter 2009, DataQuick reported.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 26.0 percent of statewide resale activity last quarter. That was down from an estimated 26.4 percent the prior quarter and up from 25.7 percent of all resales a year earlier. The estimated number (rather than percentage) of short sales last quarter rose 4.2 percent from a year earlier.
NOD's fell in all home price categories last quarter. But mortgage defaults remained far more concentrated in California's most affordable neighborhoods. Most of the loans going into default are still from the 2005-2007 period: The median origination quarter for defaulted loans is still third-quarter 2006. That has been the case for three years, indicating that weak underwriting standards peaked then.
The most active "beneficiaries" in the formal foreclosure process last quarter were Wells Fargo, JP Morgan Chase and Bank of America.
On primary mortgages, California homeowners were a median eight months behind on their payments when the lender filed the Notice of Default. The borrowers owed a median $14,364 on a median $308,885 mortgage.
(chart)
Notices of Default -Houses and condos
County/Region 2011Q4 2012Q4 Yr/Yr%
Socal 34,013 20,879 -38.6%
Bay Area 10,012 5,399 -46.1%
Santa Cruz 295 168 -43.1%
Santa Barbara 524 316 -39.7%
San Luis Obispo 359 221 -38.4%
Monterey 509 377 -25.9%
Coast 1,687 1,082 -35.9%
Statewide* 61,517 38,212 -37.9%
*Includes other counties
