California Foreclosure filings slow down in September

October 15th, 2008 | by Marina |

According to September 2008 California Foreclosure Report released by Foreclosureradar.com notice of default filings, which indicate the start of the foreclosure process, fell 61.8 percent in September primarily due to new legislation that went into effect on September 8th.

The report says this drop in foreclosure filings was mainly because of the California State Senate Bill 1137 which requires lenders to contact default homeowners to explore options for avoiding foreclosure on their primary residence at least 30 days before filing a notice of default. Also the bill specifically looks to encourage loan modifications as an alternative to foreclosure. The state, however, cannot force lenders, often operating under Federal Law, to modify an existing loan. The bill also effected new Notice of Trustee Sale filings, which dropped 47.3 percent from August. The bill did not directly impact foreclosure sales however, they still fell by 12.4 percent.

Following findings were reported by ForeclosureRadar

1) Only 16,352 Notices of Default were filed in September, down from 42,790 in August, a decrease of 61.8 percent from August 2008, and a decrease of 36.4 percent from a year earlier.

2) Notices of Trustee Sale filings decreased 47.3 percent from August, to a total of 19,116 filings. Despite the significant decline, filings increased 33.9 percent from September 2007.

3) Properties taken to sale at auction increased 163.2 percent from the prior year, to 23,409 sales, with a combined loan balance of $9.75 Billion. This represents a 12.4 percent drop from August 2008.

4) Lenders took back 95 percent of the properties taken to auction, with a combined loan value of $9.19 Billion. Third party purchases were flat from the prior month, but increased slightly as a percentage, due to the decline in sales activity.

“CA State Senate Bill 1137 has rendered analysis of current activity against prior foreclosure levels useless in understanding market conditions,” said Sean O’Toole, founder of ForeclosureRadar. “What is important to watch now, is how quickly lenders and trustees adjust to the new law. While it is unlikely foreclosures will return to previous levels, given the new requirements; we expect SB 1137 to have no long term impact beyond delaying the foreclosure process for homeowners, and slowing the overall recovery.”

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