California foreclosures still climbing

DISCOVERY BAY
June 16, 2009 12:15pm

California foreclosures sales jumped 31.9 percent in May, following a 35 percent increase the prior month, according to a report Tuesday from ForeclosureRadar, a Discovery Bay-based company that tracks the daily movements of foreclosures in the state.

“Notices of Trustee” sales, which set the auction date and time, rose 42 percent from April, indicating that foreclosure sales are likely to continue to rise in the weeks and months ahead, the report says.

Despite these increases, and a record number of foreclosures scheduled for auction, lenders continue to voluntarily postpone the majority of foreclosure sales, the report says.

Notices of Default, which are the first step in the foreclosure process, fell 4.2 percent from April to 40,870 filings. Year-over-year filings were down 3.1 percent from May of 2008.

Notices of Trustee Sale filings reached a new record level in May with 41,959 filings, representing an increase of 42 percent from April. Filings were 24.1 percent higher than a year earlier, and 7.6 percent higher than the previous record set in July of 2008.

Foreclosures taken to sale at auction reached 17,871, a 31.9 percent increase from the prior month, but 30 percent lower than a year earlier. Though loan values represented a total of $8.01 billion in May, 83 percent of the sales were taken to auction with a discounted opening bid that averaged just 58.6 percent of the loan value.

The majority of foreclosure sales continue to be taken back by the lender, with 87.9 percent, or 15,599 sales, with a total loan value of $6.98 Billion, taken back by the lender in May.

Third party foreclosure auction sales continued to increase substantially to a total of 2,272, an increase of 39 percent from the prior month, and a significant 228.3 percent increase from May 2008. More than half of third party sales occurred in just five counties: Los Angeles, San Diego, Orange, Riverside and Sacramento.

“While many complain that lenders are foreclosing too aggressively, and others claim a wave of foreclosures sales is imminent, the data actually shows that lenders are doing everything possible to delay foreclosure,” says Sean O’Toole, founder and CEO of ForeclosureRadar. “The reality is that we have very few homeowners being foreclosed on when viewed as a percentage of those scheduled to be foreclosed on, in default, delinquent, or upside down in their mortgage.”

By the end of May there was a record 111,824 foreclosures scheduled for sale, yet just 15.9 percent were actually sold, versus 49.2 percent of scheduled foreclosures being sold a year earlier.

Further, when sales peaked in July 2008 at levels 61 percent higher than those reached in May 2009, there were only 64,598 foreclosures scheduled for sale, 42.2 percent fewer than today.

Of those foreclosures currently scheduled, 40 percent are being postponed to a future date at the lenders request, and another 33 percent are being postponed based on the mutual agreement of lender and borrower, “clearly demonstrating that lenders are indeed delaying foreclosure in the majority of cases on their own accord,” the report says.

In terms of foreclosure sales in relation to the county’s total population, Merced County ranks as the foreclosure capital of California with 330 sales or one for every 773 people, according to ForeclosureRadar’s report. The county’s foreclosure sales in May were 39 percent above April’s but 24 percent under May 2008.

Stanislaus County ranks second in the state, with 614 sales, followed by Yuba, Riverside and San Joaquin counties.