California: Foreclosure Starts Lowest Since 2006

La Jolla, CA – January 28, 2013 – (RealEstateRama) — The number of California homeowners pushed into the foreclosure process fell last quarter to the lowest level in six years, the result of rising home values, an improving economy and a shift toward short sales, a real estate information service reported.

During fourth-quarter 2012 lenders recorded a total of 38,212 Notices of Default (NoDs) on California houses and condos. 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 foreclosure filings (NoDs) peaked in first-quarter 2009 at 135,431. DataQuick’s NoD statistics go back to 1992.

“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,” said John Walsh, DataQuick president.

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.

Foreclosure resales accounted for 16.6 percent of all California resale activity last quarter, down from 20.0 percent the prior quarter and 33.6 percent a year ago. It peaked at 57.8 percent in the first quarter of 2009. Foreclosure resales – properties foreclosed on in the prior 12 months – varied significantly by county last quarter, from 5.0 percent in San Francisco County to 31.4 percent in Sutter County.

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 filings fell in all home price categories last quarter. But mortgage defaults remained far more concentrated in California’s most affordable neighborhoods. Zip codes with fourth-quarter 2012 median sale prices below $200,000 collectively saw 5.5 NoDs filed for every 1,000 homes in those zip codes. The ratio was 3.5 NoDs filed per 1,000 homes for zip codes with $200,000 to $800,000 medians, while there were 1.3 NoDs filed per 1,000 homes for the group of zips with medians above $800,000.

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 (6,611), JP Morgan Chase (4,275) and Bank of America (2,005).

The trustees who pursued the highest number of defaults last quarter were NDex West (mostly for Wells Fargo), Cal-Western Reconveyance (also Wells Fargo) and Quality Loan Service Corp (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.

On home equity loans and lines of credit in default, borrowers owed a median $4,693 on a median $77,187 credit line. The amount of the credit line that was actually in use cannot be determined from public records.

San Diego-based DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Notices of Default are recorded at county recorders offices and mark the first step of the formal foreclosure process.

Although 38,212 default notices were filed last quarter, they involved 37,343 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit).

Of the state’s larger counties, mortgages were least likely to go into default in San Mateo, Santa Clara and Marin counties. The probability was highest in Yuba, Madera and Tulare counties.

Trustees Deeds recorded (TDs), or the finalized loss of a home to the formal foreclosure process, totaled 21,127 during the fourth quarter. That was down 7.9 percent from 22,949 foreclosures in the prior quarter, and down 32.4 percent from 31,260 in fourth-quarter 2011. Last quarter’s foreclosure tally was the lowest for any quarter since second-quarter 2007, when 17,458 homes were foreclosed on. The all-time peak was 79,511 foreclosures in third-quarter 2008. The state’s all-time low was 637 in second-quarter 2005, DataQuick reported.

Just as with mortgage default filings, foreclosures remained far more concentrated in the state’s most affordable communities. Zip codes with fourth-quarter 2012 median sale prices below $200,000 collectively saw 4.3 homes foreclosed on for every 1,000 homes in existence. That compares with 2.0 foreclosures per 1,000 homes for zip codes with medians from $200,000 to $800,000, and 0.5 foreclosure per 1,000 homes in the group of zips with medians over $800,000.

On average, homes foreclosed on last quarter took 8.9 months to wind their way through the formal foreclosure process, beginning with an NoD. That’s up from an average of 7.9 months the prior quarter and down from 9.7 months a year earlier.

While 1.1 million of California’s 8.7 million houses and condos have been involved in a foreclosure proceeding the past five years, 780,000 –  less than ten percent, were actually lost to foreclosure. The other 320,000 were either sold, or the payments brought current.

At formal foreclosure auctions held statewide last quarter, an estimated 42.0 percent of the foreclosed properties were bought by investors or others who don’t appear to be lender or government entities. That was up from an estimated 39.2 percent the previous quarter and up from 31.2 percent a year earlier, DataQuick reported.

(chart)

Notices of Default (Trustees Deeds further down)

Houses and condos

County/Region           2011Q4     2012Q4     Yr/Yr%

 

Los Angeles             12,355      8,100     -34.4%

Orange                   4,297      2,169     -49.5%

San Diego                4,813      2,655     -44.8%

Riverside                6,014      3,887     -35.4%

San Bernardino           4,827      3,165     -34.4%

Ventura                  1,437        728     -49.3%

Imperial                   270        175     -35.2%

Socal                   34,013     20,879     -38.6%

 

San Francisco              409        236     -42.3%

Alameda                  2,117      1,194     -43.6%

Contra Costa             2,398      1,342     -44.0%

Santa Clara              1,847        867     -53.1%

San Mateo                  712        346     -51.4%

Marin                      263        149     -43.3%

Solano                   1,245        696     -44.1%

Sonoma                     815        452     -44.5%

Napa                       206        117     -43.2%

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%

 

Sacramento               3,791      2,195     -42.1%

San Joaquin              1,745      1,098     -37.1%

Placer                     871        469     -46.2%

Kern                     1,562      1,082     -30.7%

Fresno                   1,675      1,150     -31.3%

Madera                     274        209     -23.7%

Merced                     487        332     -31.8%

Tulare                     777        515     -33.7%

Yolo                       300        173     -42.3%

El Dorado                  352        262     -25.6%

Stanislaus               1,259        798     -36.6%

Kings                      175        172      -1.7%

San Benito                 139         65     -53.2%

Yuba                       189        114     -39.7%

Colusa                      45         18     -60.0%

Sutter                     210        121     -42.4%

Central Valley          13,851      8,773     -36.7%

 

Mountains*                 579        551      -4.8%

 

North Calif*             1,375      1,528      11.1%

 

Statewide*              61,517     38,212     -37.9%

 

*Includes other counties

 

 

 

 

Trustees Deeds Recorded

Houses and condos

 

County/Region           2011Q4     2012Q4     Yr/Yr%

 

Los Angeles              5,380      3,496     -35.0%

Orange                   1,508        941     -37.6%

San Diego                2,044      1,285     -37.1%

Riverside                3,397      2,400     -29.3%

San Bernardino           2,718      2,025     -25.5%

Ventura                    595        330     -44.5%

Imperial                   194        127     -34.5%

Socal                   15,836     10,604     -33.0%

 

San Francisco              162         79     -51.2%

Alameda                  1,038        541     -47.9%

Contra Costa             1,354        779     -42.5%

Santa Clara                718        330     -54.0%

San Mateo                  290        149     -48.6%

Marin                       96         56     -41.7%

Solano                     697        500     -28.3%

Sonoma                     391        269     -31.2%

Napa                        85         62     -27.1%

Bay Area                 4,831      2,765     -42.8%

 

Santa Cruz                 132         87     -34.1%

Santa Barbara              287        177     -38.3%

San Luis Obispo            171        123     -28.1%

Monterey                   281        180     -35.9%

Coast                      871        567     -34.9%

 

Sacramento               2,194      1,639     -25.3%

San Joaquin              1,006        703     -30.1%

Placer                     460        281     -38.9%

Kern                     1,013        744     -26.6%

Fresno                   1,029        770     -25.2%

Madera                     187        145     -22.5%

Merced                     351        255     -27.4%

Tulare                     469        350     -25.4%

Yolo                       151        123     -18.5%

El Dorado                  207        146     -29.5%

Stanislaus                 793        512     -35.4%

Kings                      125        108     -13.6%

San Benito                  64         30     -53.1%

Yuba                       148         68     -54.1%

Colusa                      23         18     -21.7%

Sutter                     144        104     -27.8%

Central Valley           8,364      5,996     -28.3%

 

Mountains*                 425        351     -17.4%

 

North Calif*               933        844      -9.5%

 

Statewide*              31,260     21,127     -32.4%

*Includes other counties

Source: DataQuick, DQNews.com
Media calls: Andrew LePage (916)456-7157