California Foreclosures Continue At Breakneck Pace

Foreclosures in California continue to rise at a fast pace with little chance of slowing down. Despite recent legislation to make it more difficult for lenders to foreclose …

Foreclosures in California continue to rise at a fast pace with little chance of slowing down. Despite recent legislation to make it more difficult for lenders to foreclose in California, foreclosures are expected to continue rising. Diana Golobay from HousingWire has more on the latest foreclosure numbers from California.

Foreclosure sales in California rose 31.9% in May after jumping 35% the month before, according to a survey by ForeclosureRadar.

The service, which tracks each foreclosure in the state, noted 30% fewer foreclosures went to sale at auction from the same time last year. The total auction sales in May — 17,871 properties — represented more than $8bn in total loan value, although the majority — 83% — of these sales started at an opening bid at an average 58.6% of the loan value, according to the survey.

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Notices indicating the date and time of foreclosure auctions spiked 42% from April, reaching a record high and indicating a likely continuance of the rising trend of sales in months to come.

The survey noted that “lenders continue to voluntarily postpone the majority of foreclosure sales,” although a law that took effect this week will make such freezes mandatory for some lenders that don’t already have a thorough modification program in place.

Notices indicating default, the first step in the foreclosure process, actually fell 4.2% from April and were down 3.1% from the year-ago period.

“While many complain that lenders are foreclosing too aggressively, and others claim a wave of foreclosures sales is imminent, the data actually shows that lenders are doing everything possible to delay foreclosure,” says ForeclosureRadar CEO Sean O’Toole. “The reality is that we have very few homeowners being foreclosed on when viewed as a percentage of those scheduled to be foreclosed on, in default, delinquent, or upside down in their mortgage.”

Of the foreclosures scheduled, lenders postponed 40% percent at their own request and another 33% at the mutual request of the lender and borrower. In May, lenders weren’t under obligation to modify, which would have shown up as a cancellation of foreclosure sale, rather than postponement, ForeclosureRadar says. Instead, May saw a record low 6% of scheduled foreclosure sales canceled.

This article has been reposted from HousingWire. View the article on HousingWire’s mortgage finance news website here.

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