La Jolla, CA.–The number of California homeowners pulled into the formal foreclosure process dropped to an eight-year low last quarter, the result of an improving economy, foreclosure prevention efforts and higher home prices, a real estate information service reported.
Continuing a years-long trend, mortgage defaults remained far more concentrated in the state’s most affordable neighborhoods. Zip codes with 2013 median sale prices below $200,000 collectively saw 3.1 NoDs filed last quarter for every 1,000 homes in those zip codes. The ratio was 2.0 NoDs per 1,000 homes for zip codes with $200,000-to-$800,000 medians, while there were 0.7 NoDs filed per 1,000 homes for the group of zips with medians above $800,000.
Most of the loans going into default are still from the 2005-2007 period. The median origination quarter for defaulted loans is still third-quarter 2006. That has been the case for more than four years, indicating that weak underwriting standards peaked then.
Although 18,120 default notices were filed last quarter, they involved 17,773 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit).
Among the state’s larger counties, loans were least likely to go into default last quarter in Marin, Santa Clara and San Mateo counties. The probability was highest in Tulare, Fresno and Riverside counties.
At formal foreclosure auctions held statewide last quarter, an estimated 40.0 percent of the foreclosed properties were bought by investors or others that don’t appear to be lender or government entities. That was down from an estimated 48.0 percent the previous quarter and down from 41.8 percent a year earlier, DataQuick reported.