California Foreclosures Slowed as Banks Deferred Actions

by Donald Hanz on Foreclosures

The pace of California foreclosures slowed as banks deferred the completion of their foreclosure actions. According to a research firm, banks operating in California took longer to complete their foreclosure actions by nearly 28 percent in March.

Banks were taking 225 days to complete the foreclosure process for every distressed home in March. The research firm reported that the overall number of homes foreclosures for sale in California in March dropped because banks delayed sending trustee sales notices until after about 188 days, a sharp increase from the previous county of 142 days.

Because of the delays in lender actions, the total number of preforeclosure properties in March increased month-over-month by nearly 13 percent to 157,768 units. Compared to March last year, the preforeclosure inventory dropped by a little bit more than 12 percent in March.

Foreclosure postings have been declining in California since the last months of 2009 when state legislators passed a law requiring banks to notify first distressed homeowners and inform them of their mortgage situation and the possible events that could follow before sending them formal notices of default.

The number of default notices in March dropped by almost 45 percent year-over-year to 32,484 while the number of trustee sale notices fell by 3.1 percent year-over-year to 33,489.

Despite the drops in notices of delinquencies, the overall number of California foreclosures is still relatively large. California still made up a huge percentage of total foreclosure filings throughout the country.

Foreclosure analysts said that the Obama administration has been trying its best to craft and implement foreclosure prevention schemes, but so far, the schemes have not made a huge dent on the foreclosure crisis. Analysts even said that foreclosures are difficult to prevent because they are actually part of the natural solution of the trillions in debts incurred by homeowners and investors.

The percentage of foreclosure postings that eventually became bank owned properties increased by more than 66 percent year-over-year and more than 28 percent month-over-month to 15,304 units. Of the properties sold at trustee auctions, more than 79 percent were repossessed by lenders or acquired by third parties which are mostly investors.

Meanwhile, foreclosure cancellations soared year-over-year by 160 percent and rose month-over-month by 20.2 percent. Analysts said the number of cancellations shot up primarily because of filing errors. But more than 50 percent of cancellations were due to efforts by lenders to cooperate with federal and state agencies in reducing further surges in California foreclosures.

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