California, one of the hardest hit states during the housing bust, is facing a new situation as its foreclosure inventory shrinks on default cancellations, short sales, filing errors and statutory time frames that prevent homes from reaching the state’s distressed inventory.
The state also is dealing with new legislation such as the Homeowners Bill of Rights, which takes effect in January and will have the potential to slow or influence foreclosure timelines. Some analysts have suggested the Homeowners Bill of Rights will turn California into a judicial foreclosure state by default as banks file with the court to avoid potential pitfalls written into the legislation.
Truckee, Calif.-based analytics firm ForeclosureRadar said California REO properties scheduled for sale declined 7.6% in November when compared to the previous month and fell 31.8% from a year earlier.
ForeclosureRadar said the steep decline in the state’s foreclosure inventory over the past year has created what the firm calls “an inventory crisis of total homes for sale.”
Actual foreclosure cancellations rose 4.7% from October and 34.7% from a year earlier in the West Coast state. Most of the cancellations were caused by a larger pool of foreclosures going into short sales or loan modifications.
But some of the decline stems from filing errors and statutory time frames that prevented completion of the foreclosure process.
“The policies of ‘extend and pretend’ continue to slow foreclosure activity while ensuring foreclosures will play an important role in our economy for years to come,” said Sean O’Toole, founder & CEO of ForeclosureRadar.
ForeclosureRadar reports on distressed data from all the West Coast markets. Below is a snapshot of the research firm’s statistics for November.