Nearly a quarter-million California properties were foreclosed upon in 2008, breaking a record set the year before, according to a report Tuesday from ForeclosureRadar, a Discovery Bay company.
And in December, following a short lull induced by new state legislation, the number of "notices of default" shot back up to levels reached last summer, indicating that more foreclosures are on the way, the company said.
Last year's statewide total of 249,940 foreclosures was up 158 percent from just under 97,000 in 2007, when total foreclosures barreled ahead of the former record-high year of 1996. That year, just over 58,000 California owners lost their properties to foreclosure, according to MDA DataQuick, another company that tracks such information.
The year-end foreclosure numbers are sobering, and so was the month of December, by at least one measure. After three months in which "notices of default" were far fewer than earlier in 2008, in December lenders filed 42,421 such notices statewide, nearly doubling the total number sent to California property owners in November. Default notices are the documents lenders send to late-paying homeowners to notify them that foreclosure proceedings are beginning.
Notices of default had dropped off steeply in September following the enactment of a new state law requiring mortgage companies to give delinquent homeowners 30 days' notice before beginning the foreclosure process with a notice of default. But the rebound of default notices showed that the California Legislature's effort to reduce foreclosures by passing the law, known as SB 1137, has not been successful, said Sean O'Toole, founder of ForeclosureRadar. Part of the problem, he said, is that most homeowners who default on their loans are badly "underwater," or owe much more on their homes than the homes are now worth. "Lenders simply don't have sufficient reserves to lower principal balances enough to help homeowners in foreclosure escape the prison of debt their home now represents," O'Toole said in statement released with the data. He said the average foreclosed property has a market value $180,000 less than the owner's mortgage balance. So, it looks like foreclosures are still on the way up even though Fannie and Freddie have extended their freeze. I wonder how much worse it will be once those two fire up the foreclosure engines again....