AUDIO: California foreclosure auctions soar in January

DISCOVERY BAY
February 12, 2008 4:06pm

The number of California homes sold at foreclosure auction jumped by 55 percent in January to a total of 19,821, with a combined loan value of $8.06 billion, according to a new report Tuesday from ForeclosureRadar.com of Discovery Bay.

Compared to the same period one year ago, this represents a 454 percent increase.

Five of the top ten counties for foreclosures last month were in the Central Valley, led by San Joaquin County with 1,000 homes going on the auction block, a 700 percent increase over the number a year earlier.

Stanislaus County is ranked third in the state on a per capita basis with Sacramento County fourth, Yolo County fifth and Merced County seventh, according to the computations by ForeclosureRadar.

Madera County had a breath-taking 3,400 percent increase in foreclosure sales last month compared to January a year earlier. The 105 homes auctioned off amounted to 88 percent more than in December.

“The auction sales are a far more accurate indicator of the foreclosure problem. Defaults have not risen nearly as rapidly as auction sales,” says Sean O’Toole, founder of ForeclosureRadar. “While certainly more homeowners are getting into trouble, the far larger issue is that fewer homeowners are able to get out of foreclosure than ever before."

(Mr. O’Toole amplifies on the figures and looks to the future in a CVBT Audio Interview. Please click on the link below to listen or to download the MP3 file to your computer or iPod.)

Statewide, Notices of Defaults recorded in January numbered 38,617, up 16.4 percent from 32,948 in December, 2007. This increase follows a 45.1 percent increase from November to December. With a minimum of roughly four months between recording of a Notice of Default and the property being sold at auction, the recent increases in defaults clearly indicate that auction sales are likely to also increase further in the coming months.

By comparing January sales to defaults four months ago, it appears that as many as 80 percent of defaulting homeowners may now lose their home at auction.

Homeowners aren’t the only party to foreclosure under pressure. In January 98 percent of auction sales went back to the lender after receiving no bids, despite significant discounts now being offered by lenders at auction.

Out of the 19,821 homes that went to auction, 13,950 were discounted, with an average opening bid discount of 16 percent. Of that, 4,624 had discounts of 30 percent or more. The majority of these discounts are from the amount owed on an 80 percent first mortgage made in the last two to three years, meaning that many of these properties are being offered at 50 to 70 percent of their prior value, the report says

At the county level, notable month over month increases in activity were widespread, with the majority of counties seeing increases in auction sales of 50 percent of more.