In California, 75,230 NODs were filed in 4Q 2008, down 20.2% from 3Q 2008, and down 7.7% from 4Q 2007. More importantly, 46,183 trustee’s deeds were recorded in 4Q 2008, down 41.9% from 3Q 2008, and up 45.8% from 4Q 2007, all as reported by MDA DataQuick.

Make no mistake in viewing this data, the housing market has yet to hit rock-bottom. Foreclosures in California will dramatically increase over the next 18-24 months until the resale market has cleared out the properties encumbered by dead-end loans which need to be foreclosed, if not first crammed down.

Most of the loans placed in foreclosure in 4Q 2008 were originated in 2006, two to three years earlier. Looking at the potential quantity of foreclosures in the future, three million home loans were originated in 2006, 2 million in 2007, and 1.1 million in 2008. However, loans originated in 2005 are likely to see increases in NODs in 2009 as the average age of loans going into foreclosure is increasing as dropping property values eliminate ownership equity in more properties.

Of the 8.5 million houses and condos in California, 2.8% (236,231) were foreclosed on in 2008 alone. 2009 will see an increase in this percentage.

REO resales accounted for 55.1% of all California resale activity in 4Q 2008 and is accelerating in percentage. In 4Q 2007, it was 19%.