California Foreclosures Soar in January; 98 Percent of Auctions Lead to REO
As home sales slow to two-decade lows throughout California, foreclosures are soaring -- up a staggering 454 percent in January versus foreclosure volume just one year earlier. The number of properties sold at foreclosure auction in the Golden State jumped by 55 percent in January, to a total of 19,821, with a combined loan value of $8.06 billion, according to information service ForeclosureRadar. Notices of Default recorded in January numbered 38,617, up 16.4 percent from 32,948 in December. This increase follows a 45.1 percent increase from November to December. With a minimum of roughly four months between recording of a Notice of Default and the property being sold at auction, the recent increases in defaults clearly indicate that auction sales are likely to also increase further in the coming months. â€œThe auction sales are a far more accurate indicator of the foreclosure problem. Defaults have not risen nearly as rapidly as auction sales," said Sean O'Toole, founder of ForeclosureRadar. "While certainly more homeowners are getting into trouble, the far larger issue is that fewer homeowners are able to get out of foreclosure than ever before." Homeowners aren't the only party to foreclosure under pressure. Ninety-eight percent of auction sales went back to the lender in January after receiving no bids, despite the significant discounts now being offered by lenders at auction. Out of the 19,821 homes that went to auction, 13,950 were discounted, with an average opening bid discount of 16 percent. Of that, 4,624 had discounts of 30 percent or more, ForeclosureRadar said. The majority of these discounts are from the amount owed on an 80 percent first mortgage made in the last 2 to 3 years, meaning that many of these properties are being offered at 50 to 70 percent of their prior value. At the county level, notable month over month increases in activity were widespread, with the majority of counties seeing increases in auction sales of 50 percent of more in just one month. For more information, visit http://www.foreclosureradar.com.