TRENDS EXPLAIN FORECLOSURES IN SOUTHERN CALIFORNIA

The foreclosure process starts with a Notice of Default (NOD) which generally is served on the homeowner approximately 90-days after stopping paying on their mortgage. The homeowner has a redemption period of at least three months after a filing of a NOD to bring the mortgage current, negotiate a loan modification or sell the home. If this is not accomplished a Notice of Trustee sale is issued and as quickly as 20-days latter the foreclosure process ends with a Trustee Auction where the home is sold to a third party investor or returns to bank ownership. The foreclosure process can also be cancelled (most frequently by a Short Sale of the home) or postponed. In short, the Notice of Default indicates the start of the foreclosure process, the Trustee sale, the end. Four things can take place at/prior to the Trustee Sale; the sale can be postponed, in can be cancelled (most frequently because the home has been sold in a short sale), it can be sold to a 3rd party (e.g., a cash investor) or it can be returned to the Bank and become an REO home sale.

A total of 43,407 Notices of Default (“NODs”) were recorded  in the five major Southern California Counties during the 3rd Quarter of 2010 (July–September). That was up 20.5 percent from the prior quarter, but  down 27.6 percent from the third-quarter 2009, according to San Diego-based MDA DataQuick. The peak was in first-quarter 2009, when 76,600 notices of default were filed. The trend over the last five quarters has been downward.

The number of Trustees Deeds (“TDs”) recorded in the five major Southern California Counties, which reflects the number of houses and condos foreclosed on, totaled 21,968 during the third quarter of 2010. That was down 7.0 percent from  the prior quarter, and down 14.0 percent from the third-quarter 2009. Trustee sales have reflected a steady trend of some 22,550 homes per quarter.

Not all homes complete the foreclosure process. Cancellations are taking an increasing share of the homes in Foreclosure Outcomes. Increasing from 34 percent in September 2009 to 52 percent in September 2010. As mentioned above the vast majority of cancellations are home sold “short” by the bank – Short Sale homes.  With the dramatic increase in short sales we are seeing a drop in the number of homes returning to the bank – REO homes. We are also seeing a drop in homes sold to 3rd party investors – the reasons for this decline is likely to be less bargains in the market and the fact short sale homes are supporting higher prices.

Foreclosures, as measured by the percent they represent of the owner occupied housing stock, is most deeply felt in the counties of the Inland Empire, Riverside and San Bernardino. While foreclosures in Orange County represent only two percent of the owner occupied housing stock, the number almost triples to 5.7 percent in Riverside County.

Robert Deane is a realtor serving Newport Beach and the Temecula Wine Country.

Real Estate has been central to my life for over  30-years. I love to see new homes being built – I have held executive positions with two major homebuilders and California’s two largest land developers – The Irvine Company, developer of the Irvine Ranch, and Newhall Land, developer of Valencia. In these positions I learned from the brightest minds in the industry and  had the advantage of multi-million dollar budgets to  perfect my knowledge of all aspect of home design, marketing and sales. I have managed the marketing and sales of thousands of homes in all market conditions.

I have brought those skills and a continuing passion in real estate to the resale home market.  I specialize in Newport Beach and the Temecula Wine County.

Follow my blog here on Newport Beach Real Estate Expert and I will earn your trust.