Pace of Defaults in California Slows During June
The number of California homeowners entering into foreclosure fell slightly during June, marking the fourth consecutive month of essentially flat activity in Notices of Default, the first step of the mortgage default process. According to ForeclosureRadar, which released the report, defaults may be stabilizing at a high shelf -- but the number of borrowers able to exit the default pipeline once it begins is as bad as it's ever been. Looking back one year to defaults filed in June 2007, 60 percent of those defaults resulted in the property being sold at foreclosure auction, ForeclosureRadar said. Since that time, default filings have increased 88.8 percent, while properties sold at auction have increased 248 percent; the much greater surge in foreclosure sales relative to year-over-year growth in default activity speaks volumes about just how troubled borrowers really are. "Price declines and negative equity continue to drive foreclosures, leaving homeowners upside down and with few options if they need to sell," said Sean O'Toole, founder of ForeclosureRadar. "The continued failure of lenders to approve short sales on a timely basis is leading to greater losses for both the homeowner and the foreclosing lender, decreasing transaction volumes for Realtors, lenders and title companies, and is littering neighborhoods with vacant, unkempt and vandalized homes." Discounts offered by lenders at auction increased again, proving that in many key California market, institutional sellers are now making the real estate market. In June 2008, the average opening bid was 31 percent below the amount owed on the loan in foreclosure; and 87 percent of opening bids were discounted, with nearly one in four discounted by 50 percent or more, according to ForeclosureRadar statisitics. Los Angeles, Riverside and San Bernardino counties continued to lead the state in absolute volume of foreclosures due to their large size; yet, each county also recorded declines in foreclosure sales month-over-month, indicating that at least for one month, the ominous upward march of foreclosure activity has seen the tide turned. For more information http://www.foreclosureradar.com.