Fewer California homeowners received notices of default and had their homes foreclosed on in the third quarter compared to the same period last year, according to a report from real estate information company MDA DataQuick.
The number of houses and condos foreclosed on fell 4.8 percent from the second quarter and 9.3 percent from 2009’s third quarter, to 45,377. These figures are based on records of trustee’s deeds, which in most cases transfer ownership of a property to the lender.
The third quarter’s level of trustee’s deeds was 42.9 percent below an all-time high of 79,511 in third-quarter 2008, according to the report.
Notices of default rose 18.9 percent quarter-to-quarter, but fell 25.5 percent compared to last year’s third quarter, to 83,261. That’s 38.5 percent below a peak of 135,431 in 2009’s first quarter, but 81.2 percent above the quarterly average of 45,940 over the past 15 years.
"Over the past year, with some minor ups and downs, financial institutions and their servicers have been processing a fairly steady number of defaults each quarter. That probably has more to do with their capacity to process defaults than with higher or lower levels of incoming distress," said John Walsh, DataQuick’s president, in a statement.
The effects of foreclosure moratoriums by some lenders "aren’t yet apparent," the report added.
"Policies can vary on how to use the formal foreclosure process in taking homes back and reselling them. It would be nice to think that servicers are carefully following all the rules and regulations, but in the real world there are differences of interpretation, as we’ve seen in the news recently. It’ll be interesting to see how this plays out in fourth-quarter trends," Walsh said.
The state’s most affordable ZIP codes represent 25 percent of the housing stock and accounted for 41.2 percent of all default notices in the third quarter, up from 40 percent in the second quarter and down from 42.9 percent in the third quarter of 2009.
In ZIP codes where the median sales price this year was below $200,000, default activity rose 24.5 percent quarter-to-quarter, but fell 21.1 percent year-over-year.
The ratio of such homes receiving a default notice was 14.4 for every 1,000 units, compared to 9.5 statewide and 2.7 in the ZIP codes where the median sales price this year was above $800,000. In those ZIP codes, default notices fell 1 percent quarter-to-quarter and 28.3 percent year-over-year.
Completed foreclosures among these homes fell 14.7 percent from the second quarter but rose 11.8 percent year-over-year. One in every 1,000 homes in these ZIPs had been foreclosed on.
The number of homes foreclosed among ZIPs with a median sales price under $200,000 fell 5.2 percent quarter-to-quarter and 9.7 percent year-over-year. These low-end ZIPs had 9.5 foreclosures for every 1,000 homes.
Homes in the Bay Area counties of San Francisco, Marin and San Mateo were the least likely to go into default, while homes in the Central Valley counties of Merced, Madera, and Sutter were the most likely to receive a default notice, the report said.
Borrowers were a median five months behind on a primary mortgage and owed a median $15,156 on a median $310,000 mortgage before receiving a default filing, the report said. Lenders originated these loans in the median month of August 2006; in 2009’s third quarter, the median origination month was July 2006.
Countrywide, Bank of America, World Savings, Wells Fargo and Washington Mutual originated the most defaulted loans, which, combined, accounted for 19.1 percent of all default activity in the third quarter.
The lenders that repossessed the most homes last quarter were Bank of America (15,992), Wells Fargo (10,069), Mortgage Electronic Registration Systems, also called MERS (5,292), and JP Morgan Chase (5,172), the report said.
On average, it took 8.7 months for a home to go through the entire foreclosure process, beginning with a notice of default. That’s down from 9.1 months in the second quarter but up from 7 months in 2009’s third quarter.
Foreclosure resales made up 35.5 percent of all existing-home sales in California last quarter, down from 42.7 percent the same period a year ago.