Politics & Money

California Defaults Soar in March

Following a surge in California’s foreclosure activity in February, Notices of Default and Notices of Trustee sale continue to soar in March, reaching record and near-record levels, respectively, according to today’s ForeclosureRadar’s California Foreclosure Report. Notices of default in March increased 29.3% over February, to 54,268 filings, while notices of Trustee sale — which set an auction date and time — rose 82.3% to 33,178 filings. Sales at auction, however, plunged 41.4% in California, reaching the lowest levels seen since the third quarter of 2007. Third parties bought 10.7%, or 1,073 properties of those properties taken to auction. While banks still take back the majority of foreclosures at trustee sale, ForeclosureRadar said third party bidding has continually increased since January 2008. The report also found lender discounts at auction increased substantially from February to March, reaching an average of 44.1%. The largest discounts were seen in Monterey County with an average discount of 56.1%, while San Mateo County was among the lowest at 20.7% “While there is a lag between foreclosure filings and foreclosure sales, these dramatic differences are likely best explained by the unintended consequences of government intervention in the foreclosure process,” reads the report. Sean O’Toole, founder and CEO of ForeclosureRadar says the government’s programs aimed at addressing the foreclosure problem don’t deal with the core issue of negative equity.  “[T]he only tangible effect of these programs so far is a significant increase in uncertainty for homeowners, lenders, investors and even government officials trying to make sense of these wild swings in activity,” he said. Government officials say, however, the Treasury’s “Making Home Affordable” program, alone, could positively effect 7 to 9m homeowners, allowing them to refinance into lower mortgage rates and avoid foreclosure. Obama said last week he’s seen “extraordinary jumps” in refinance activity across the nation. A “Swing” on the Horizon? Some of the nation’s largest mortgage companies are stepping up foreclosures on delinquent homeowners, according to a report by the Wall Street Journal Wednesday — which could send foreclosure activity rampant.  J.P. Morgan Chase & Co., Wells Fargo & Co., Fannie Mae and Freddie Mac told the WSJ they have increased foreclosure activity in recent weeks and lifted internal moratoriums which have temporarily halted foreclosures in the recent past. Over the past couple months, as the Obama administration worked to hash out details of its housing-rescue plan, many mortgage companies have temporarily halted foreclosures. “We had stopped putting additional loans into the foreclosure process so we could be sure that delinquent borrowers would have every opportunity to take advantage of new initiatives that we were putting in place,” a Chase spokesman told the WSJ. Now, the companies have started to sift through troubled borrowers, determining which candidates are eligible for help. The result, according to findings by the WSJ, will be an increased volume of foreclosed homes — which, if the homes are pushed through the entire process, have the potential to boost foreclosure sales — which dipped drastically in March. Write to Kelly Curran at kelly.curran@housingwire.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade

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