Notices of default on single-family homes and condos – the first indication that a foreclosure could be possible – fell 35.10 percent in Santa Clara County in the first quarter of this year in comparison to the same period last year. The decline mirrors a statewide trend, as real estate information service MDA DataQuick reports notices of default were down 40.2 percent in California from the first quarter of 2009.
It is unclear how much of the drop can be attributed to shifts in market conditions, and how much is because of changing policies, according to DataQuick president John Walsh. "We are seeing signs that the worst may be over in the hard-hit entry-level markets, while problems are slowly spreading to more expensive neighborhoods. We're also seeing some lenders become more accommodating to work-outs or short sales, while others appear to be getting stricter about delinquencies," Walsh said.
Lending institutions started formal foreclosure proceedings on 2,656 Santa Clara County homeowners during the January-to-March period, compared with 4,090 homeowners the same period a year ago. There was also a 7.6 percent drop in foreclosures during the first quarter of this year, with 1,069 trustees deeds recorded or homes lost to foreclosure. In the first quarter of 2009, 1,157 homes were lost to foreclosure in Santa Clara County.
Statewide, a total of 81,054 notices of default were recorded during the first quarter of this year, down 4.2 percent from 84,568 for the prior quarter, and down 40.2 percent from 135,431 in the first quarter of 2009. Foreclosures also dropped 1.7 percent statewide, from 43,620 during the first quarter of 2009 to 42,857 the first quarter of this year. The all-time peak was 79,511 in the third quarter of 2008.
The state's most affordable sub-markets accounted for 47.5 percent of all default activity a year ago. In first-quarter of 2010, that fell to 40.9 percent.
According to the MDA DataQuick report, California's mid- to high-end housing markets were more likely to have seen a rise in mortgage defaults last quarter, though the concentration of default activity (measured by defaults per 1,000 homes) remained relatively low in those areas.
"It's true that the high-end housing markets have seen more defaults than a year ago, but I seriously doubt we will see a deluge of foreclosures in these markets as we have seen in the entry level markets," said Jeff Bell, president of the Silicon Valley Association of REALTORS®. "Generally, buyers at the higher-end markets have lower loan-to-value ratios and have more equity because they put more money down when they purchased these homes."
On primary mortgages, California homeowners were a median five months behind on their payments when the lender filed the notices of default. The borrowers owed a median $14,066 in back payments on a median $330,147 mortgage. On home equity loans and lines of credit in default, borrowers owed a median $3,897 on a median $64,422 credit line.
The report also states on average, homes foreclosed on last quarter spent 7.5 months winding their way through the formal foreclosure process, beginning with a notice of default. A year ago it was 6.8 months. The increase could reflect lender backlogs and extra time needed to pursue possible loan modifications and short sales.
Foreclosure re-sales accounted for 42.6 percent of all California resale activity last quarter - down from 57.8 percent a year ago, the peak. At formal foreclosure auctions last quarter, an estimated 24.6 percent of foreclosed properties went to investors and others who do not appear to be lender or government entities. That's up from an estimated 17.6 percent a year ago.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.