Foreclosure backlog keeps building

July stats from ForeclosureRadar show that the backlog of California homes in default, but not yet repossessed, keeps growing.

At some point, many of these properties will be repossessed and put back on the market. Some may be kept by the current owners through loan modifications, but that hasn't happened much so far. Until then, they remain clogging the system as "shadow inventory," most likely to be foreclosed and sold again. 

Key California data points:    

-- Default notices, which are sent when a borrower has missed several payments, were up 12% in July compared with a year earlier. Notices of default are the first stage of foreclosure.    

-- Auction notices, in which an auction date is set, were about even with last year's level. This is the second step in foreclosure. After a default notice is sent, and even after an auction date is set, the borrower and lender can reach a loan modification agreement or sell the property to get out of foreclosure.

-- Repossessions were down 40% from a year earlier, even though default notices were up and auction notices were flat. Lenders are delaying the final step in foreclosure. This is what's creating the growing backlog of distressed properties.

-- Foreclosures scheduled for sale -- these are the properties awaiting auction -- increased 93% from a year earlier.

The jump in foreclosures scheduled for sale reflects the widespread practice of lenders stalling the final sale of distressed properties. There are more than 124,000 of these properties in California awaiting auction.

“More homeowners are now sitting at the brink of foreclosure, just days away from the next scheduled auction date, then ever before, yet we simply aren’t seeing the wave of foreclosures many predicted," said ForeclosureRadar CEO Sean O'Toole.

ForeclosureRadar is an online seller of California default data.

More repossessions are coming, however, due to the degree to which so many in California are underwater on their mortgages. The average California home in foreclosure has a loan balance of $425,000 but an estimated value of $237,000, ForeclosureRadar says.    

-- Peter Y. Hong

Comments

[Danny]

I don't think that NODs will peak until at least next year. Trouble trouble trouble.

[JML]

Let the backlog grow...i'll be waiting to purchase my cheap foreclosure

[valerie brooks]

124,000 unpossessed properties in California. My sister has another one in Arizona. The next wave hasn't hit yet. California for rent signs are numerous. I looked up the rents, they aren't down. I'm thinking the foreclosures are keeping the rents high. They plan to release 40,000 California prisoners due to lack of funds. That will make competition and life in the streets even more dangerous so Arnold will get his police state. I'm sure this is happening because people won't share or even offer to share their houses. They are too busy, struggling for independence. They system and criminals alike are busy terrorizing the energy out of people for their own agenda's. People want to learn things and get money they don't have the foresight to deal with because only aliens and higher spirits know what is really going on and even causing all this but they will do it anyway, go for it and wind up taken down. This is all a planned agenda. How far can it go before it has to be torn down? The American Dream for freedom in their decisions was the greatest trap in the world. If you come to live in California and are low income for example, most people find out they have to pay huge money and be stuck living in a closet that's hard to pay for. That's why many opt to live in their cars and the beaches are so empty. In the 20's, etc. the beaches were dotted with people every foot taken. No more.... there's ton's of room on any beach, even in the most populated Los Angeles, Venice Beach. Most people aren't out on the beach because they don't have the time and finances to sit around on the beach very often. Most tans come from the tanning salons.

[republicantrustfunder]

The bank bailout Tarp was a fraud. They were supposed to take our tax money and modify loans. Instead they constricted credit using the money for THEIR balance sheets.

Wake up Amerca, its morning!