A new report released late Tuesday shows that the number of troubled borrowers in California continued to mount during March -- if anything, the stats show that the foreclosure crisis is accelerating and suggests that the normalization of the state’s real estate market is still far from complete.
Calif foreclosures March 2008
click for larger view
In particular, Notices of Trustee Sale -- usually issued three months after a borrower receives a Notice of Default, and notification of an imminent forced sale of the property back to the bank -- jumped nearly 50 percent in March to 27,571 filings. ForeclosureRadar, a foreclosure property information service, said the number of NTS filings represented an all time record. Notices of Default rose 14.3 percent during March as well, ForeclosureRadar reported, indicating that new borrowers are finding themselves at foreclosure's doorstep. Many of those on the front lines of managing defaults in California said that they'd seen a decrease in activity during the month -- and that sentiment was likely due to a dip in the number of foreclosure sales at auction in March, which fell 6.5 percent to 15,833 (still a large number, on its own). "Unfortunately, the foreclosure crisis in California is still deepening," said Sean O'Toole, founder of ForeclosureRadar. "The record jump in defaults last December are just now showing up in early April foreclosure sales, and the new record level of defaults this month won’t begin to appear at auction until July.” When the properties finally do make it to auction, it's likely they'll end up in the bank's lap as REO rather than being bought by investors. O'Toole said that 97.7 percent of the properties sold at foreclosure in the state are headed back to the lender, despite attempted discounts averaging 21 percent of loan value. Discount strategies varied, with some lenders offering even deeper discounts on their properties, depending on where the properties were located -- to no avail. Wilshire Credit Corp. was by far the most aggressive in the state, bidding on properties at an average of 43.1 below original loan value during the month, according to the ForeclosureRadar report. World Savings and Downey Savings and Loan -- two well-known option ARM specialists -- also got aggressive with discounts, offering 32.8 and 30.4 percent off of loan value, respectively. "We see the housing pain in California continuing through the end of this year, as the market shakes off the effects of the credit mess and rampant overbuilding," O'Toole said. "As devastating as this may be, we do think that the end result – greater housing affordability for the average Californian, using conventional loan products – will benefit consumers and the housing industry alike." For more information, visit http://www.foreclosureradar.com.