Estimate: 1,300 foreclosures every business day in California

Banks and lenders have now foreclosed on $100 billion worth of California homes over the past two years, and are foreclosing at the rate of 1,300 houses every business day, according to a new report from ForeclosureRadar.com.

The report, covering foreclosure activity in California in July, notes that new mortgage defaults are declining, but foreclosures are continuing to rise sharply.  "It is clear that far fewer homeowners are finding a way out of foreclosure," the company reports.

The pace of foreclosures in California -- 1,300 every business day -- has more than tripled from the year-ago rate of 415 per day, ForeclosureRadar estimates.

Overall, the level of foreclosures in the state increased 22.5% from June to July, ForeclosureRadar reported, while the level of defaults dropped by 4.6% in the same time period.  The vast majority of foreclosed homes are taken over by banks -- 96.6% in July, the company reported, although it noted that banks are increasingly offering discounts to investors in hopes of avoiding taking possession of foreclosed houses in the first place.

"Although the declines in Notices of Defaults seem promising, much of this can be explained by the actions of just one lender," said Sean O'Toole, founder of ForeclosureRadar. "Ninety-one percent of the decline in Notices of Default since April can be attributed to Countrywide Financial. Unfortunately, this is more likely due to the challenges of integrating two companies the size of Countrywide Financial and Bank of America, than it is a fundamental shift in foreclosure activity."

The federal housing rescue bill sets aside $4 billion for local governments to purchase foreclosed homes, but O'Toole says that amount is so small relative to the overall pool of foreclosed houses that it will have little economic impact. "$4 billion is kind of a meaningless sum," O'Toole told CNN Money. "It can't possibly make a difference. You've brought a pistol to a nuclear war."

Click below to read the entire news release from ForeclosureRadar on California foreclosures in July.

CALIFORNIA

FORECLOSURE SALES JUMP 22.5 PERCENT SInce June

Lenders take a record $12.55 Billion in loans to foreclosure auction

 

Discovery Bay, CA, August12, 2008 – ForeclosureRadar (www.foreclosureradar.com), the only website that tracks every California foreclosure with daily auction updates; today issued its California Foreclosure Report for July 2007. Sales at foreclosure auction jumped dramatically in July, increasing by more than $2 Billion in combined loan value to $12.55 Billion. This represents more than 1,300 properties being taken to auction per business day, up from 415 per day one year ago. Notices of Default declined for the third straight month. The total number of properties that are still actively scheduled for auction increased to 64,598 at the end of July, up from 59,973 at the end of June, and 53,793 at the end of May. This indicates that further increases in foreclosure sales are still likely near term, despite the declining number of defaults.

 

High-level findings include:

• Notices of Default declined by 4.6 percent, to a total of 40,219 filings representing $17.71 Billion in loans.
• Notices of Trustee Sale, which are typically recorded 105 days after the Notice of Default, and which set the auction date and time, increased 9.8% to 39,010 filings in July. Looking at this number in comparison to Notices of Default, it is clear that far fewer homeowners are finding a way out of foreclosure. At 97 percent of defaults, July’s Notices of Trustee Sale filings are nearly double the 50 percent that were more typical as recently as February.
• Sales increased to a total of 28,795 properties with a combined loan balance of $12.55 Billion. Of those, 27,817 received no bid higher than the lender’s opening bid and became bank owned (REO).
• Sales to 3^rd parties at auction continued to increase, and were up 28.7 percent from the prior month. 3^rd parties purchased loans with a combined loan balance of $481 Million, at an average discount of 39 percent to the loan balance. Despite the increase in sales to 3^rd parties, lenders continue to take back 96.6 percent of all properties that went to auction, and have now taken back a total of $100 Billion in loans since January 2007.

 

“Although the declines in Notices of Defaults seem promising, much of this can be explained by the actions of just one lender,” said Sean O'Toole, founder of ForeclosureRadar. “Ninety-one percent of the decline in Notices of Default since April can be attributed to Countrywide Financial. Unfortunately, this is more likely due to the challenges of integrating two companies the size of Countrywide Financial and Bank of America, than it is a fundamental shift in foreclosure activity.”

Average discounts offered by lenders from the outstanding loan balance at foreclosure auction reached 45 percent in Merced and San Joaquin counties. Statewide discounts increased to 33 percent on average. San Francisco continued to see the smallest discounts at 18 percent on average.

 Of the 243,444 Notices of Trustee Sale filed in the last year that have concluded the foreclosure process, 85 percent resulted in the loss of the property at trustee sale. Only 15 percent averted foreclosure; and, of those, 30 percent have since had a new foreclosure notice filed.

--Peter Viles
Photo Credit: Getty Images

Comments

[sevenfell]

And this is just the first wave of foreclosures. Just wait until all of those toxic pay-option ARMs recast. The recast schedule is set to peak in 2009.

[LeftLA]

There was a Saxon that went under a couple of years ago, but there's a new Saxon that's buying. There are also funds getting ready to jump into buying mortgages rather than the properties. One investor I know says the figures he'll get 1/3 performing, 1/3 fixable and 1/3 he'll have to foreclose on. But he's offering 10-20 cents on the dollar, so he'll make serious money anyway.

[I want some]

So, I purchased my house for 900k, and it is challenging to make these house payments for us, but not impossible. Today, my house is worth about 650k and dropping. Should I get some free money from the government, lenders and taxpayers to help reduce my loan cost? Is this just a free giveaway to anybody who is upside down on their house? If so, will they run out of money at some point, and the first in line will get this big handout but everyone else will miss out? Would it be better to wait for my house to fall in value further so that I can get more government relief?

[sevenfell]

I want some,
I don't think the government is just handing out free money. There are alot of caveats to deal with, like for instance if you have a second lien on the house, it must be reconciled first.

[foreclosure auctions]

jumped dramatically in July, increasing by more than $2 Billion in combined loan value to $12.55 Billion. This represents more than 1,300 properties being taken to auction per business day, up from 415 per day one year.
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Marq Thompson