Foreclosure delays may be behind current peak in foreclosure activity
Discovery Bay, CA, September 16, 2008 - ForeclosureRadar, the only website that tracks every California foreclosure with daily auction updates; today issued its California Foreclosure Report for August 2008. Analysis show that Notices of Default, which indicate the start of the foreclosure process, increased in California by 4.8 percent; while both Notices of Trustee Sale and actual foreclosure sales dropped. With the exception of February, a traditionally slow month, Notices of Default have stayed in a tight range between 40,000 and 43,000 per month - a peak which may simply reflect the inability of lenders and trustees to process additional files.
High-level findings include:
- Notices of Default increased by 4.8 percent, to a total of 42,790 filings - almost perfectly offsetting the prior month's 4.6 percent decrease.
- Notices of Trustee Sale declined by 7 percent, to 36,292 filings in August.
- Properties taken to sale at auction decreased by 8.6 percent, to 26,309 properties, with a combined loan balance of $11 Billion.
- Of properties taken to sale, 96 percent went back to the lender, with a combined loan value of $10.55 Billion. Third party purchases continued to increase as the discounts offered by lenders also increased.
"It is becoming increasingly apparent that lenders and trustees can either no longer process all of their foreclosures, or are purposefully delaying the foreclosure process," said Sean O'Toole, founder of ForeclosureRadar. "While the traditional measures of foreclosure activity are showing signs of slowing, the number of properties scheduled for sale increased by 7 percent from July, and doubled from the beginning of the year."Traditional measures of foreclosure activity include Notices of Default, which are essentially unchanged from the beginning of the year, and sales at auction, which are up 32 percent from January. Measuring the number of properties currently scheduled for foreclosure requires tracking the actual foreclosure auctions, a service only ForeclosureRadar provides in the state of California. The number of properties currently scheduled for sale has doubled to 70,000 since January. Of these scheduled sales, 61 percent are being postponed at the banks discretion (lenders may postpone the foreclosure auction up to one year in California). Beyond delaying the sale of properties in the foreclosure process, a recent report from the Mortgage Bankers Association also seems to indicate that lenders are delaying foreclosure altogether. They reported that while 6.41 percent of all loans were delinquent, just 2.75 percent were in foreclosure.Average discounts offered by lenders on the outstanding loan balance at foreclosure auction averaged 36 percent statewide; with one third of all properties taken to auction being offered at discounts of 50 percent or more. Foreclosure Radar estimates that the vast majority of loans taken to auction are first mortgages (at 96 percent of all foreclosures), followed by homeowner association liens at 2 percent, and second and third mortgages at less than 2 percent combined. This is a dramatic shift from the past, when second mortgage foreclosures were far more common, and is clearly due to a lack of equity for these lenders to recover.Looking at foreclosure sales at the county level, the largest percentage increases occurred in relatively strong markets including Santa Cruz (91 percent), Santa Clara (32 percent), San Francisco (26 percent), Monterey (26 percent) and Napa (11 percent). In comparison, some of the harder hit areas like Stanislaus and San Bernardino saw substantial percentage declines. This, and other factors, seemingly points to a fundamental shift in foreclosure activity; from subprime loans, to the pay option ARMs that are just now beginning to reset and recast to higher payments.
ForeclosureRadar August Report by County
RankChangeInRankCountyNDFNTSSalesPopulationPer Sale% ChangeJuly 2008% ChangeAugust 200710Merced594588550449-9%455%21San Joaquin157314111286518-5%248%31Riverside533947193414572-11%267%4-2Stanislaus11951048899572-15%253%53Solano8356875807290%230%61Sacramento244322581793773-9%189%7-1San Bernardino421135702502796-15%297%84San Benito9984718123%265%9-4Yuba15512484831-35%226%106Monterey67754251083326%384%11-1Contra Costa174914931196861-6%248%12-3Madera261219164880-11%398%13-2Kern13171042871895-7%295%140Calaveras434349933-6%975%15-2Sutter13610795963-5%245%16-1Imperial1771121421,173-20%261%171Placer4013522401,319-9%186%181Fresno9748106221,446-10%322%193Sonoma4764023241,481-5%474%205Amador3326251,5254%160%21-1Yolo1801711171,627-18%375%225Alameda14669609071,6550%268%23-2San Diego3010281918291,677-16%227%246Tehama98361,709-5%14%253El Dorado1901491011,745-3%210%263Tulare4093202341,7980%327%277Napa13189731,84211%424%28-4Ventura7496744261,919-19%319%2918Santa Cruz1941511282,05091%421%3012Santa Clara120010648532,07932%475%312Santa Barbara2672742012,098-6%270%32-6Colusa10102,151-41%-100%33-1Nevada7350462,175-12%257%341Orange2539218112362,486-15%319%352Los Angeles8394679040422,535-10%358%360Shasta18297712,556-12%126%374Mono17852,719-29%ND386San Luis Obispo154142942,8007%255%39-1Kings9170502,955-21%678%40-23Sierra1013,501-75%ND41-10Glenn141483,581-53%250%421Tuolumne2622163,639-20%120%435Butte7359593,682-34%97%445San Mateo3002351684,310-5%292%455Mariposa12244,5540%ND46-7Plumas181745,361-56%325%47-1Marin11276465,507-32%322%487Lassen1065,909-33%-100%49-4Lake10106,411-86%-100%503Humboldt4053177,796-15%960%511Mendocino5124118,222-21%300%52-29Siskiyou242059,229-84%400%53-2Inyo1029,258-50%-100%544Modoc2319,836ND-50%551San Francisco1631137211,09326%265%56-2Trinity10114,024-67%-100%57-17Del Norte50214,598-83%-100%
CALIFORNIA FORECLOSURE REPORT METHODOLOGYRankings are based on population per foreclosure sale. NDF indicates the number of Notices of Default that were filed at the county, and NTS indicates filed Notices of Trustee Sale. Sales indicates the number of properties sold at foreclosure auction. Percentage changes are based on monthly Sales. The data presented by ForeclosureRadar is based on county records and individual sales results from daily foreclosure auctions throughout the state—not estimates or projections.
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