The number of mortgage default notices filed against California homeowners dropped last quarter as a new state law changing the formal foreclosure process came into effect. If that procedural change hadn't kicked in early September, indications are default filings for the third quarter would have been about the same as the record number filed in this year's second quarter, according to a real estate information service.
The new state law SB 1137 (Perata), known as the Mortgage Relief Bill, took effect early in September, and requires lenders to contact homeowners and explore restructuring options before initiating the foreclosure process. In many instances lenders must try to contact homeowners delinquent on their mortgage payments, and then wait 30 days before filing a default notice.
According to an MDA DataQuick report, mortgage servicers recorded 94,240 notices of default on homes during the July-through-September period, a decrease of 22.5 percent from a revised record of 121,673 in the second quarter of this year, and up 29.9 percent from the same period in 2007. There were about 40,000 default filings per month from March to August. In September, the number dropped to 14,995 filings. Notices of default mark the first step of the formal foreclosure process.
"It's unclear just how much foreclosure activity will be time-shifted into future months. We'll know more when we have fourth-quarter numbers," DataQuick President John Walsh said.
Although foreclosures are few in the Silicon Valley region in comparison to other parts of the state, REALTOR® members of the Silicon Valley Association of REALTORS® are concerned about their impact on families. At a recent REALTOR® tour meeting in Palo Alto, Roger Strohm of Yale Investment Company shared tips on how to help foreclosure victims. Strohm said foreclosure victims have a difficult time renting because the foreclosure results in a bad credit report and landlords often check on credit reports of potential tenants. He shared this advice:
1. Explain to the landlord that the foreclosure was an isolated incident, and there are no other judgments against the applicant.
2. Present to the landlord past payment records or receipts on non-credit report accounts, such as utility bills, which would show the applicant has been able to keep up with other bills.
3. Offer to pay a higher security deposit to assure a landlord of the applicant's credit-worthiness.
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.