Default Notices on Foreclosures Plunge in State

Rising prices and a recovering economy pushed home foreclosure proceedings in California to their lowest level in two years, a real estate data firm said Friday.

The number of default notices that lending institutions sent to California homeowners dropped 23% in August to 10,645 from the same period last year, according to Acxiom/DataQuick Information Systems. The year-to-year drop was the steepest since DataQuick began to track foreclosure notices in 1992, the firm said.

“Clearly, people are better off than they were a couple of years ago” DataQuick analyst John Karevoll said. “There’s more of an economic buffer between the households and economic distress.”

Industry analysts point to new jobs and wage increases as the primary reasons for the plunge in notices, as well as an upturn in home prices over the last year.

The average price of a resale home in Southern California increased 5.8% in August to $174,000, from $164,000 a year ago. And home values are expected to rise moderately over the next year and a half, pushing foreclosures down even further.

In Southern California, the steepest drops in notices--the first step in the foreclosure process--were in Orange and San Diego counties, where default levels plunged to 1992 levels.

In Orange County, foreclosure notices dropped 37% to 686 in August, from 1,093 the same time last year. Default notices dropped 31% in San Diego to 611, from 883 last year, and dipped 26% in Los Angeles County to 3,215, from 4,349 last year.

Mortgage brokers say lenders are more willing to negotiate with homeowners on a payment schedule or reduced payments, rather than undergo foreclosure.

“When it comes down to the wire, they lose more on foreclosures,” Steve Abo of Credit America said. “So they are listening to people and being more flexible.”

Foreclosure activity peaked across the state in March, when banks sent out 15,473 notices. Unable to sell and unable to make mortgage payments, many homeowners walked away from their homes or, in some cases, simply mailed their keys to the lender.

“Properties were being dumped back on the market in as-is condition,” Karevoll said. “Homes didn’t look good, and they sold for much less than the other houses on their street.”