Foreclosure Cancellations Jump 40 Percent

November Foreclosure Sales and Filings Impacted by Holidays

Discovery Bay, CA, December 15, 2009 ForeclosureRadar (www.foreclosureradar.com), the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for for November 2009. Despite apparent headline month-over-month declines in foreclosure activity, the real story requires looking at changes in the average daily activity. November had only 18 days on which filings could be recorded or trustee sales held because of fewer days in the month, Veterans Day and the Thanksgiving Holiday, while October had 22 recording days, and 21 trustee sale days. After adjusting for this difference in days we find little month-over-month change in the statistics, with the exception of Notices of Trustee Sale which declined 13.4 percent, Cancellations which rose 40.0 percent and Sales to 3rd Parties which rose 8.0 percent on a daily average basis.

“We’ve been waiting to see some impact from the Home Affordable Modification Program,” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com. “The 40 percent increase in cancellations this month is likely just the beginning of what we expect will be a wave of cancellations under this program”.

Foreclosure Filings

Notice of Default

Prior Month Prior Year
-18.98% 35.41%

Notice of Trustee Sale

Prior Month Prior Year
29.14% -4.03%

It is important to recognize that the decline in Foreclosure Filings is primarily due to a difference in the number of days documents can be recorded month-over-month and not fewer filings each day. With just 18 recording days in November versus 22 in October, average daily filings of Notices of Default only declined 1 percent, while Notices of Trustee Sale declined 13.4 percent from the prior month.

8-Jun 8-Jul 8-Aug 8-Sep 8-Oct 8-Nov 8-Dec 9-Jan 9-Feb 9-Mar 9-Apr 9-May 9-Jun 9-Jul 9-Aug 9-Sep 9-Oct 9-Nov
43580 41861 43504 16746 17361 21857 43974 40580 49799 58623 47337 42203 47093 47530 37063 38175 36531 29597
36212 40126 37329 19674 26402 28468 28449 24890 21147 34559 31556 43355 30711 40757 34224 33112 38555 27321

Foreclosure Outcomes

Back to Bank (REO)

Prior Month Prior Year
12.20% -7.52%

Cancellations

Prior Month Prior Year
19.77% 26.10%

Sold to 3rd Party

Prior Month Prior Year
-7.43% 286.13%

Like Filings, Foreclosure Outcomes have to be looked at on a daily average basis to understand the month- over-month differences. When that is done, we see that Bank Owned properties increased 2.4 percent, and Sold to 3rd Party increased 8.0 percent on a daily average basis from the prior month.

Perhaps most significant is the 40.0 percent month-over-month increase in daily average Cancellations when viewed on a daily average basis. This is especially notable as the Obama Administration announced a new campaign this month to convert trial loan modifications to permanent modifications. This is important because properties remain in foreclosure during the trial period, and are only cancelled once the modification becomes permanent. We’ve therefore been watching sales and cancellation closely looking for either a rise in foreclosure sales as modifications fail, or a rise in cancellations if they become permanent. This months rise in cancellations are in line with recent Administration reports that 31,382 of the 728.408 trial modifications became permanent. And given their new conversion drive, further cancellations are likely.

8-Jun 8-Jul 8-Aug 8-Sep 8-Oct 8-Nov 8-Dec 9-Jan 9-Feb 9-Mar 9-Apr 9-May 9-Jun 9-Jul 9-Aug 9-Sep 9-Oct 9-Nov
23788 28001 25381 22112 13296 15267 15608 14533 16419 9201 12145 15864 19713 14632 14367 13155 16081 14119
4741 5797 5694 6368 11281 8302 6445 6717 6904 6352 6707 7162 8674 10818 10004 8660 8741 10469
773 988 1069 1076 825 952 833 893 1266 1094 1653 2305 2694 2691 3285 3411 3971 3676

Foreclosure Inventories

Scheduled for Sale

Prior Month Prior Year
1.42% 135.96%

Bank Owned (REO)

Prior Month Prior Year
0.04% -39.42%

Despite the significant drop in filings of new Notices of Trustee Sale, and an increase in the number of Cancellations, the number of foreclosures Scheduled for Sale still rose. The simple reality is that homeowners are continuing to enter foreclosure faster than they are coming out. This will likely continue until we see meaningful progress on loan modifications, or the often predicted “foreclosure wave” finally occurs.

Resale of Bank Owned (REO) homes declined in November, but so too did the number of homes that banks took back at auction, leaving inventories flat month-over-month.

8-Jun 8-Jul 8-Aug 8-Sep 8-Oct 8-Nov 8-Dec 9-Jan 9-Feb 9-Mar 9-Apr 9-May 9-Jun 9-Jul 9-Aug 9-Sep 9-Oct 9-Nov
59518 64598 69428 59226 59695 64237 67841 69374 64177 82390 92002 111824 113141 124874 131300 140382 149456 151573
133532 144596 152614 155269 147076 145226 139028 135073 133143 120427 110177 104528 101932 95530 93584 89834 87938 87976

Foreclosure Discounting

The discounts received by 3rd party investors at the court house steps increased to 19.9 percent below market value, from the prior months 17.9 percent below.

Foreclosure Sales by Loan Origination Date

Q1’04 Q2’04 Q3’04 Q4’04 Q1’05 Q2’05 Q3’05 Q4’05 Q1’06 Q2’06 Q3’06 Q4’06 Q1’07 Q2’07 Q3’07 Q4’07 Q1’08 Q2’08 Q3’08 Q4’08
142 218 297 468 603 938 1339 1459 1349 1701 1814 2020 1634 1317 867 494 271 133 88 49

Despite prices now well below 2004 levels in many areas, loans made in 2004 and earlier remain a very small percentage of foreclosures.

Foreclosure Activity By County

Notice of Default Notice of Trustee Sale Back to Bank (REO) Sold to
3rd Party