California Foreclosures Tick Up but Remain Lower Than Last Year

California Foreclosures Tick Up but Remain Lower Than Last Year

BY: KRISTA FRANKS BROCK

Foreclosures edged up over the month of October in California but continue to remain well below year-ago levels, according to PropertyRadar.

Notices of default rose 15.3 percent, notices of trustee sales increased 4.1 percent, and foreclosure sales grew 3.9 percent over the month of October in California.

However, over the year, notices of default were down 45.2 percent, notices of trustee sale declined 59.2 percent, and foreclosure sales decreased 65.4 percent. Foreclosure sales continue to hover near record lows, according to PropertyRadar.

Foreclosure inventories in California have been “trending mostly sideways since July,” according to PropertyRadar.

“While the low level of foreclosures seems to be good news, the market is ignoring the 1.5 million underwater California homeowners at risk of default that can neither sell an existing home or buy another,” said Madeline Schnapp, PropertyRadar’s director of economic research.

“These underwater homeowners are a big drag on the California real estate market recovery and keep much needed inventory off the market,” Schnapp said.

A closer look at foreclosure sales reveals a decline in foreclosures sold to third parties and an increase in REO sales. Third party sales were down 2.1 percent over the month, while REO sales increased 7.6 percent, according to PropertyRadar.

The REO increase can be partly attributed to an adjustment period after a short interim during which banks stalled on foreclosures this summer after the Office of the Comptroller of the Currency “specified minimum standards for handling borrower files subject to foreclosure,” according to PropertyRadar.

PropertyRadar also compared California and four of its Western neighbors – Arizona, Nevada, Oregon, and Washington – in terms of foreclosure starts, sales, and inventories.

California came out ahead by volume in all three categories, and its percentage increase in foreclosure starts over the month of October was also highest at 15.7 percent.

At the other end of the spectrum, Nevada posted an 82.5 percent decline in foreclosure starts over the month.

Washington experienced the greatest increase in foreclosure sales for the month with a 7.1 percent rise, while Nevada posted the most momentous decline.

While posting the greatest declines in foreclosure starts and sales, Nevada posted the highest increase in foreclosure inventory, a 4 percent rise over the month.

Oregon experienced the greatest drop in foreclosure inventory, a 2.5 percent decrease in October.

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