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California mortgage defaults drop 24.3%

The number of homes entering the first stage of foreclosure fell in the fourth quarter compared with the previous quarter, MDA DataQuick says -- a sign that banks are working with delinquent borrowers

January 28, 2010|By Alejandro Lazo

Throughout California, 84,568 notices of default were filed at county recorders' offices in the fourth quarter, an increase of 12.4% from the same period of 2008, DataQuick said. Trustee deeds recorded, signifying the actual loss of a home to foreclosure, totaled 51,060 from October through December, up 2.1% from the third quarter and 10.6% from the fourth quarter of 2008.

For the full year, 190,360 California homes were lost to foreclosure, down 19.42% from 2008, when foreclosures topped 236,000. That was the most since DataQuick began tracking foreclosures in 1988.

"Clearly, many lenders and servicers have concluded that the traditional foreclosure process isn't necessarily the best way to process market distress," DataQuick President John Walsh said. He said banks have been negotiating with distressed borrowers to keep them in their homes and increasingly turning to "short sales" in which the banks accept an offer that is less than the value of the outstanding mortgage; banks end up taking a loss on such deals.

The worst may be over for California's hard-hit entry-level market, DataQuick said. The most affordable 25% of the state's housing stock accounted for about 35% of all foreclosure activity in the fourth quarter, down from 52% a year earlier.

Mortgages were more likely to go into default in inland areas such as Merced, Stanislaus and Riverside counties, which were ravaged by foreclosures during the downturn. The coastal counties of San Francisco, Marin and San Mateo had the least probability of default, DataQuick said.

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