The volume of mortgage default notices filed on California homeowners fell more than 10% in Q309, according to MDA DataQuick
, a mortgage information provider based in San Diego.
The drop in notices of default -- the first step in the foreclosure process -- stems from evolving foreclosure polices from lenders, an unsteady legislative environment and an increase in the number of renegotiated mortgages, according to the report.
A total of 111,689 default notices were delivered to homeowners during the period from July to September. Default notifications decreased 10.3% from 124,562 notices in Q209. But it’s an increase of 18.5% from the same quarter in 2008.
2009’s peak came in its first quarter, when default notices totaled 135,431, but that number was inflated by deferred activity from the previous four months, according to the report.
“It may well be that lenders have intentionally slowed down the pace of formal foreclosure proceedings,” said John Walsh, president of MDA DataQuick. "If so, it’s not out of the goodness of their hearts. It’s because they’ve concluded that flooding the market with cheap foreclosures in this economic environment may not be in their best financial interest."
Walsh added: "Trying to keep motivated, employed homeowners in their homes might be the most cost-efficient way to stem losses."
The loans that defaulted in Q309 had a median origination date in July 2006. The origination dates for foreclosures in the first two quarters of the 2009 also centered around the same month, but in Q308, the median origination month was June 2006 – meaning the foreclosure process moved a month forward in the last year.
“There’s a batch of truly nasty loans that were made in mid 2006,” Walsh said. "There’s another batch made in late 2006. These are worse than the mortgages before and after, and it’s taking a long time to process them."
The leading banks that originated the loans defaulting in Q309 were Countrywide
with 7,583 defaults, Washington Mutual
with 5,146 and Wells Fargo
California’s foreclosure activity, though still concentrated in affordable communities inland, shows signs of migrating into more expensive areas, according to the report. The state’s most affordable sub-markets, which represents 25% of the housing stocks, accounted for 42.9% of all default activity – a drop from 52.2% a year ago, according to the report.
Write to Jon Prior