The number of California homes in the first step of the foreclosure process last quarter dropped to the lowest level since late 2005, according to a real estate information service report. The drop in notices of default is attributed to a stronger economy and higher home prices.
According to DataQuick, during the April-through-June period of this year, a total of 17,524 Notices of Default (NoDs) were recorded at county recorders offices. That number is down 8.8 percent from 19,215 in the prior quarter, and down 31.9 percent from 25,747 in second-quarter 2013. The NoD tally in second-quarter 2014 was the lowest since fourth-quarter 2005, when 15,337 NoDs were recorded. NoD filings peaked in first-quarter 2009 at 135,431.
The DataQuick report says 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, indicating weak underwriting standards had peaked at the time.
The 17,524 default notices were filed last quarter, involved 17,105 homes since some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit). On primary mortgages, homeowners were a median 12 months behind on their payments when the lender filed the notice of default. The borrowers owed a median $27,601 on a median $309,083 mortgage. On home equity loans and lines of credit in default, borrowers owed a median $6,992 on a median $66,150 credit line.
Santa Clara County experienced a 13 percent year-to-year drop in the number of mortgage default notices filed against homeowners. Lenders sent 421 default notices to Santa Clara County homeowners in the second quarter of this year, compared with 644 in second-quarter 2013. In San Mateo County, lenders sent 170 notices of default of homeowners, down 38.6 percent from 277 in second-quarter 2013.
"Silicon Valley's economy has definitely bounced back. The stronger economy and job growth in the region have led to a strong demand for housing which, in turn, has resulted in increased home prices and higher home values," said David Tonna, president of the Silicon Valley Association of REALTORS®. "Many homeowners who were underwater not too long ago are relieved to know that their homes have appreciated in value."
DataQuick reported Trustees Deeds recorded (TDs), or the final loss of a home to the foreclosure process, totaled 7,392 last quarter - the lowest level for any quarter since 6,078 TDs were filed in fourth-quarter 2006. The all-time peak was 79,511 foreclosures in third-quarter 2008.
Santa Clara County had a drop of 28.6 percent in foreclosures, with just 90 recorded in second-quarter 2014, compared with 126 in second-quarter 2013. San Mateo County had a drop of 17.7 percent, with 51 in second-quarter 2014 and 62 in second-quarter 2013.
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.
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