Report: Lenders increase cancellations of foreclosures in California but continue to take back troubled properties

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Fresh evidence that lenders are increasingly working with California’s troubled homeowners emerged today as a research firm reported that the average number of foreclosures canceled on a daily basis increased by 40% in November compared to October.

Nevertheless, the average number of properties repossessed by banks on a daily basis continued to increase steadily, by 2.4%, in November compared to the month prior, according to the report by ForeclosureRadar.com.

The total number of foreclosures in California scheduled for sale in November rose to 151,573. That was a 1.4% increase from the prior month, and a 136% increase from November 2008.

“The simple reality is that homeowners are continuing to enter foreclosure faster than they are coming out,” Foreclosure.radar Chief Executive Sean O’Toole wrote in the report. “This will likely continue until we see meaningful progress on loan modifications, or the often-predicted but yet-to-materialize ‘foreclosure wave.’”

The 40% month-over-month increase in average daily cancellations was significant because the Obama administration announced a new plan late last month to shame mortgage-servicing companies into doing a better job of making 90-day trial modifications permanent. The administration plans to do this by drawing attention to those companies not doing well at making those changes, as well as threatening penalties and other sanctions.

In Los Angeles County, the total number of defaults in November decreased 19.1% from the month prior, though they were up 33% when compared to November 2008. Similarly, the percentage of homes repossessed by banks decreased 12.8% month-over-month in November but increased 9.3% year-over-year.

Fontana resident Harold Sumpter, 72, is one of those borrowers who is behind on a mortgage because of a job loss. Sumpter said that since he lost his job as a general contractor for Toyota earlier this year he has struggled to pay the $897 monthly payment. He is two months behind on his mortgage, though he said he would probably be able to cull together the payment for December.

Making the payments is difficult because he and his wife make only about $1,900 a month combined with their Social Security benefits, and their household expenses roughly total $2,500, including the mortgage, Sumpter said.

“I have been current for years,” he said. “Just in the last few months, I haven’t been able to come up with the money.”

-- Alejandro Lazo