California Foreclosure Starts Lowest Since 2005 from Elaine Golden-Gealer

The number of California homes entering the formal foreclosure process last quarter dropped to the lowest level since late 2005, the result of a stronger economy and higher home values, a real estate information service reported.

A total of 17,524 Notices of Default (NoDs) were recorded at county recorders offices during the April-through-June period. That was down 8.8 percent from 19,215 in the prior quarter, and down 31.9 percent from 25,747 in second-quarter 2013, according to DataQuick, which is owned by Irvine-based CoreLogic, a leading global property information, analytics and data-enabled services provider.

People dress as foreclosed homes during a protest representing 14 million unemployed Americans and demanding action from congress and corporations down on Wall Street March 6, 2012 in New York. Photographer: Timothy A. Clary/AFP/Getty Images

People dress as foreclosed homes

Last quarter’s NoD tally was the lowest since fourth-quarter 2005, when 15,337 NoDs were recorded. NoD filings peaked in first-quarter 2009 at 135,431. DataQuick’s NoD statistics go back to 1992.

“It looks like the mortgage servicers doing the foreclosure paperwork are systematically working through a backlog. While their pile is getting smaller, they’re working at a steady pace. With one exception, the number of NoDs we’ve seen filed each quarter over the last year-and-a-half hasn’t changed much, and probably just reflects staffing and workload logistics,” said John Karevoll, DataQuick analyst.

In first quarter 2013 California saw 18,568 NoDs filed. In last year’s second quarter the number was 25,747. In third quarter 2013 it was 20,314. Fourth quarter was 18,120. In first quarter 2014 the tally was 19,215, and last quarter it was 17,524.

“The relatively high NoD tally in second quarter last year reflected a one-time bump because of deferred activity and policy change. Otherwise the quarterly flow of NoDs since early last year has been remarkably flat, and probably doesn’t reflect any meaningful changes in trends. The overall trend is that homeowner distress continues to decline because of a stronger economy and rising home prices,” Karevoll said.

Most of the loans going into default are still from the 2005-2007 period. The median origination quarter for defaulted loans is still third-quarter 2006. That has been the case for more than five years, indicating that weak underwriting standards peaked then.

On primary mortgages, California homeowners were a median 12.0 months behind on their payments when the lender filed the Notice of Default. The borrowers owed a median $27,601 on a median $309,083 mortgage.

On home equity loans and lines of credit in default, borrowers owed a median $6,992 on a median $66,150 credit line. The amount of the credit line that was actually in use cannot be determined from public records.

The most active “beneficiaries” in the formal foreclosure process last quarter were Wells Fargo (2,195), Bank of America (1,763) and Nationstar (1,047).

The trustees who pursued the highest number of defaults last quarter were Quality Loan Service Corp (for Wells Fargo and others), MTC Financial (Bank of America, Greentree, JP Morgan Chase) and Sage Point Lender Services (Nationstar, Bank of New York, US Bank and OneWest Bank).

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