36% of all California resale activity was attributed to real estate owned (REO) inventory last quarter — virtually unchanged from the same period last year. REO resales varied significantly from county to county, from rates as low as 10% in San Francisco county to as high as 59% in Madera county.
82,261 Notices of Default (NODs) were recorded in the third quarter of 2010, down from 111,689 in the third quarter of 2009. The regions with the most low-tier properties have seen the greatest decreases. Low-tier regions (the 25% of zip codes with the lowest median prices) accounted for 41% of all CA defaults last quarter.
This is the highest number of NODs for any quarter so far in 2010. NOD volume peaked in the first quarter of 2009 with 135,431 NODs recorded.
Both high- and low-tier properties saw significant decreases in NODs recorded. Statewide, high-tier regions (zip codes with median home prices higher than $800,000) saw a 1% drop from the second quarter of 2010, and a 28% drop over the preceding year. On the other hand, low-tier areas (zip codes with prices lower than $200,000) actually rose 25%. These less expensive neighborhoods continue to see the highest concentration of NODs. For every 1,000 homes in low- to mid-range areas, there were 14 NODs during the third quarter. For every 1,000 homes in high-tier areas, there were ten NODs.
Also in the third quarter, a total of 45,377 homes were actually foreclosed upon. This is down from 47,669 in the second quarter, and 50,013 foreclosures the one year earlier.
It took an average of 8.7 months to complete a trustee’s sale following the recording of the NOD. One year earlier, foreclosure proceedings generally elapsed over an average period of 7 months. Dataquick sees the extended processing time as a product of lender backlogs along with the pursuit of loan modifications and short sales to circumvent foreclosure.
80% of all foreclosured properties in the third quarter had been resold on the open market by the end of September; one year ago the rate was 83.5%. It is estimated that 23% of homes sold at trustee’s sales were bought by individuals other than the lender or government groups — down from 25% last year. [For more information and trends on NOD and NOTS in California, see first tuesday’s Market Chart NODs and Trustee’s Deeds: Grim signs of real estate’s present condition.]
first tuesday take: While NODs have declined considerably since early 2009, first tuesday is not convinced this is the result of any concerted lender progress. NODs and foreclosures have remained relatively constant for the entirety of the past year, and show no signs of stopping soon. While some defaults have been delayed by “extend and pretend” loan modifications, it has been shown that such modifications, which almost never reduce the balance of the loan, only succeed in delaying the inevitable. We expect NODs, and foreclosures, to continue to depress the real estate market for the remainder of the year, and on into 2011. [For more on lender reluctance to modify loans, see the February 2010 first tuesday article, Why Won’t Lenders Renegotiate?]
Re. “California Mortgage Defaults Rise in Third Quarter,” from MDA Dataquick