July 17, 2014
La Jolla, CA.–The number of California homes entering the formal foreclosure process last quarter dropped to the lowest level since late 2005, the result of a stronger economy and higher home values, a real estate information service reported.
A total of 17,524 Notices of Default (NoDs) were recorded at county recorders offices during the April-through-June period. That was down 8.8 percent from 19,215 in the prior quarter, and down 31.9 percent from 25,747 in second-quarter 2013, according to DataQuick, which is owned by Irvine-based CoreLogic, a leading global property information, analytics and data-enabled services provider.
Last quarter’s NoD tally was the lowest since fourth-quarter 2005, when 15,337 NoDs were recorded. NoD filings peaked in first-quarter 2009 at 135,431. DataQuick’s NoD statistics go back to 1992.
“It looks like the mortgage servicers doing the foreclosure paperwork are systematically working through a backlog. While their pile is getting smaller, they’re working at a steady pace. With one exception, the number of NoDs we’ve seen filed each quarter over the last year-and-a-half hasn’t changed much, and probably just reflects staffing and workload logistics,” said John Karevoll, DataQuick analyst.
In first quarter 2013 California saw 18,568 NoDs filed. In last year’s second quarter the number was 25,747. In third quarter 2013 it was 20,314. Fourth quarter was 18,120. In first quarter 2014 the tally was 19,215, and last quarter it was 17,524.
“The relatively high NoD tally in second quarter last year reflected a one-time bump because of deferred activity and policy change. Otherwise the quarterly flow of NoDs since early last year has been remarkably flat, and probably doesn’t reflect any meaningful changes in trends. The overall trend is that homeowner distress continues to decline because of a stronger economy and rising home prices,” Karevoll said.
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 more than five years, indicating that weak underwriting standards peaked then.
On primary mortgages, California homeowners were a median 12.0 months behind on their payments when the lender filed the Notice of Default. The borrowers owed a median $27,601 on a median $309,083 mortgage.
On home equity loans and lines of credit in default, borrowers owed a median $6,992 on a median $66,150 credit line. The amount of the credit line that was actually in use cannot be determined from public records.
The most active “beneficiaries” in the formal foreclosure process last quarter were Wells Fargo (2,195), Bank of America (1,763) and Nationstar (1,047).
The trustees who pursued the highest number of defaults last quarter were Quality Loan Service Corp (for Wells Fargo and others), MTC Financial (Bank of America, Greentree, JP Morgan Chase) and Sage Point Lender Services (Nationstar, Bank of New York, US Bank and OneWest Bank).
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. CoreLogic acquired DataQuick in March. Notices of Default are recorded at county recorders offices and mark the first step of the formal foreclosure process.
Although 17,524 default notices were filed last quarter, they involved 17,105 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit).
Among the state’s larger counties, loans were least likely to go into default last quarter in San Francisco, Marin and San Mateo counties. The probability was highest in Madera, Tulare and Fresno counties.
Trustees Deeds recorded (TDs), or the final loss of a home to the foreclosure process, totaled 7,392 last quarter – the lowest level for any quarter since 6,078 TDs were filed in fourth-quarter 2006. 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.
On average, homes foreclosed on last quarter took 8.7 months to wind their way through the formal foreclosure process, beginning with an NoD. That’s up from an average of 9.5 months the prior quarter and up from 9.1 months a year earlier.
At formal foreclosure auctions held statewide last quarter, an estimated 41.0 percent of the foreclosed properties were bought by investors or others that don’t appear to be lender or government entities. That was up from an estimated 39.4 percent the previous quarter and down from 54.1 percent a year earlier, DataQuick reported.
Foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 6.1 percent of all California resale activity last quarter. That was down from a revised 7.6 percent the prior quarter and down from 11.5 percent a year ago. Foreclosure resales peaked at 57.8 percent in first-quarter 2009. Among the state’s larger counties last quarter, foreclosure resales varied from 0.9 percent in San Francisco County to 16.3 percent in Madera County.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 5.8 percent of the state’s resale market last quarter. That was down from an estimated 7.5 percent the prior quarter and 13.7 percent a year earlier.
To view the county-by-county Defaults and Foreclosures charts, please visit DQNews.com.
Source: DataQuick; DQNews.com
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