New California foreclosure starts up slightly in May
New foreclosure starts in California ticked up in May from the prior month, a new report shows.
The number of notices of default was up 4.4% from April, but down 5.2% from May 2011, according to the Foreclosure Radar website. Notices of default are the first formal stage of the foreclosure process in California, which does not require a court order for a home to be foreclosed on.
The process typically continues outside a court up to eviction. After the notice of default is filed by a lender, a home is scheduled for sale and heads to auction. The bank places the opening bid. The home either goes back to the institution or is sold off to a third-party investor unless the sale is canceled.
Last month, the number of homes that went back to the banks increased 0.6%, but were down 61.7% from the same month a year ago. The number of homes sold to third-party investors increased 14% from April and declined 3.9% from May 2011. The number of canceled auctions also decreased.
Investors and economists are keeping a careful eye on those numbers as a second wave of foreclosures has long been predicted and feared. So far, that wave has not materialized, particularly in the Western states where a court order is not needed to take back a home.
Foreclosure filings have risen in the so-called judicial states. Foreclosure processes in those states were particularly mired in controversy following the robo-signing scandal of 2010 that resulted in a historic $25-billion mortgage settlement with five of the nation’s largest mortgage servicers.
Foreclosures slowed down significantly last year as the nation’s major banks negotiated with federal regulators and state attorneys general who had investigated their practices.
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