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Fewer California homeowners received default notices in first quarter

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The state’s foreclosure crisis abated during the first three months of the year as lenders pushed the lowest number of Californians into the formal repossession process since the second quarter of 2007.

The number of Golden State residents who entered foreclosure in the first quarter declined 2.2% from the prior quarter and 15.8% from the same period in 2010. A total of 68,239 notices of default -- the first stage of foreclosure -- were filed on homes during the first three months of the year, according to San Diego research firm DataQuick.

That was the lowest level since 53,493 default notices were recorded in the second quarter of 2007 and is just over half the record 135,431 default notices recorded in the first quarter of 2009.

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Banks did step up the number of homes they took back from defaulting borrowers already in foreclosure. A total of 43,052 trustees deeds were filed in county offices in the first quarter, a 21.5% increase over the prior quarter and up 0.5% from the first quarter of 2010.

Citing ‘pervasive’ misconduct in foreclosures, federal banking regulators last week ordered the nation’s biggest banks to overhaul their procedures and compensate borrowers. A wider-ranging investigation conducted by a coalition of state attorneys general and other federal agencies, including the departments of Justice, Treasury and Housing and the Federal Trade Commission is ongoing.

The degree to which the foreclosure slowdown in California has to do with these changes and how much the drop can be attributed to changes in the state’s economic landscape is unclear. A significant number of homes in the Golden State are underwater, meaning that more is owed on the properties than they are worth. The unemployment rate remains high at 12%. Experts view both factors as a major contributor to foreclosures.

RELATED:

Banks are foreclosing while homeowners pursue loan modifications

Banks, regulators act to correct foreclosure flaws

-- Alejandro Lazo

Twitter: @AlejandroLazo

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