Calif. Foreclosures Up 22% in October: ForeclosureRadar

Foreclosure repossessions in California increased 22.24% from September to October, according to data released by ForeclosureRadar.com.

Last month’s foreclosures increased 20.95% from October 2008. October’s foreclosures were 42.56% below California’s peak month of July 2008, but since then, the inventory of real estate owned (REO) properties has grown 131.36% in California.

“While we continue to see a steady stream of properties entering foreclosure, relatively few are completing the process and being sold at auction despite the increase this month,” said Foreclosureradar.com CEO Sean O’Toole.

“The bigger picture is that more and more homeowners are finding themselves upside down in foreclosure limbo,” O’Toole added, “some hoping for a loan modification or short sale, while others are just waiting for a knock on the door.”

The number of foreclosures initiated in October remained level with September levels. But, the company said, this is due in large part to recent legislation enacted in California that will temporarily slow the foreclosure process.

Investors are continuing the purchase REO properties from lenders, and courthouse auctions are becoming more competitive, as noted by increases in sales volume and prices paid, Foreclosureradar.com said.

“Many auction investors are gaining confidence that they can make money reselling homes purchased on the court house steps, given the limited supply of homes available on the MLS and continued demand stimulus in the form of tax credits and low interest rates,” the firm said.

The discount investors paid for REO properties bought at auction decreased from 20.5% in September to 17.9% in October. The majority of properties foreclosed on in October were originally purchased with mortgage originated between January 2005 and December 2007.

Write to Austin Kilgore.