California foreclosure starts rose last quarter
New California foreclosure starts rose in the first quarter, although they remain at pre-bust levels.
Default notices -- the first step in the state’s foreclosure process -- jumped 6% from the previous quarter to 19,215, research firm DataQuick said Tuesday. New foreclosure filings rose 3.5% from the first quarter of 2013.
DataQuick analyst John Karevoll said the rise from the fourth quarter, the lowest level since 2005, probably came from lenders working through their delinquent loan pipelines and not from more financial distress.
“They may well be just working their way through a backlog, stacks of paper piled high on desks,” he said in a statement.
GRAPHIC: Southern California’s housing recovery
The year-over-year increase was the first such rise since the last three months of 2009. However, the increase came solely from a significant surge in January, as notices of default jumped 64% from a year earlier.
A series of state laws restricting the foreclosure process took effect in January 2013, holding foreclosure filings artificially low as lenders adjusted to the so-called Homeowner Bill of Rights, DataQuick said.
Default notices dropped from a year earlier in both February and March.
DataQuick said it expects foreclosure starts to continue a downward trend, although said they may tick up from one quarter to the next.
Default notices in the last three quarters haven’t been this low since late 2005 and early 2006.
Foreclosures have plunged as the economy has improved and home prices surged. With fewer borrowers owing more on their mortgage than their house is worth, homeowners can more easily refinance or sell if they run into trouble.
The median origination quarter for loans entering foreclosure was the third quarter of 2006. It has remained there for more than four years, indicating the peak of risky lending.
Roughly 7,800 homes were actually lost to foreclosure, a 5% drop from the prior quarter and a 43% decline from the same period a year earlier.
Foreclosure starts remain more prevalent in lower-cost neighborhoods, where the housing bust stung the most. Despite recent price gains, those neighborhoods still have a large number of homeowners who owe more on their mortgage than their house is worth.
In the six-county Southland, default notices rose 1.8% from a year earlier.
