The July 1 acquisition of Countrywide Financial Corp. by North Carolina-based Bank of America Corp. (BAC) is clearly having an impact on California default activity, with notices of default falling statewide for the third straight month. The vast majority of the drop is tied to loans with the now-combined mortgage operation, according to a report released Tuesday by property information providers ForeclosureRadar. Notices of default represent the first step in the foreclosure process; relative to June totals, the volume of NODs fell during July by 4.6 percent to a total of 40,219 filings, representing $17.71 billion in loans. (The July 2008 total was still well above the roughly 24,000 filings recorded in July 2007). "Although the declines in Notices of Defaults seem promising, much of this can be explained by the actions of just one lender," said Sean O'Toole, founder of ForeclosureRadar. "Ninety-one percent of the decline in Notices of Default since April can be attributed to Countrywide Financial. Unfortunately, this is more likely due to the challenges of integrating two companies the size of Countrywide Financial and Bank of America, than it is a fundamental shift in foreclosure activity." Foreclosures jump While NOD activity is flat to declining as BofA/Countrywide try to get their ducks in a row, actual foreclosures skyrocketed in California during July, ForeclosureRadar said. Sales at foreclosure auction jumped dramatically, increasing by more than $2 billion in combined loan value to $12.55 billion. This represents more than 1,300 properties being taken to auction per business day, up from 415 per day one year ago. Average discounts offered by lenders from the outstanding loan balance at foreclosure auction reached 45 percent in Merced and San Joaquin counties; statewide, discounts increased to 33 percent on average, according to the data. San Francisco continued to see the smallest auction discounts, at 18 percent on average. Despite lender's best efforts to discount, third-party buyers largely yet remain on the sidelines. Foreclosures hit a total of 28,795 properties during July; of those, 27,817 received no bid higher than the lender’s opening bid, meaning REO inventories are mushrooming throughout key areas in the state. Making matters worse, tightening credit standards and home prices that have yet to bottom out are putting borrowers in the hot seat. Of the 243,444 Notices of Trustee Sale filed in the last year that have concluded the foreclosure process, 85 percent resulted in the loss of the property at trustee sale. That means that only 15 percent of severely troubled borrowers were able to avert foreclosure; and, of those, 30 percent have since had a new foreclosure notice filed. The total number of properties in the default pipeline and actively scheduled for auction increased to 64,598 at the end of July, up from 59,973 at the end of June, and 53,793 at the end of May. This indicates that further increases in foreclosure sales are still likely near term, despite the declining number of defaults. Notices of Trustee Sale, which are typically recorded 105 days after the Notice of Default, and which set the auction date and time, increased 9.8 percent month-over-month to 39,010 filings in July -- increasing NTS filings have helped push up the default pipeline within California in recent months. For more information, visit http://www.foreclosureradar.com. Disclosure: The author held no positions in BAC 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.