Bay Area Foreclosures Down Half | Bay Area Real Estate Trends

The number of homes being foreclosed on in the Bay Area is down about fifty percent from a year ago. While this does?t explain the entire collapse in inventory, it is certainly a big part of it.

From the Contra Costa Times:

The steep drop ? mirrored in California?s foreclosure activity ? came as five major banks prepared to implement the standards of a national mortgage settlement.

The banks ? Citi, Wells Fargo, JPMorgan Chase, Bank of America and Ally/GMAC ? agreed to the settlement?in the wake of a ?robo-signing? scandal over forged and faulty foreclosure documents. That settlement?s more than 300 provisions kicked in Oct. 1.

Foreclosures ? homes taken back by the bank or sold at the courthouse steps ? dropped 21 percent from August in the four counties of the East Bay, Peninsula and South Bay, the Discovery Bay foreclosure tracking service reported.

The 687 foreclosures were just under half those of August 2011, when 1,289 homes were put on the auction block, according to the report.

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Banks appear to be ?in no rush? to foreclose, said Sean O?Toole, the company?s CEO.

As foreclosures drop, banks are turning more to short sales ? the sale of a home for less than the value of its mortgage ? and loan modifications to deal with struggling borrowers.

That can be seen in the large backlog of homes in the foreclosure process, ForeclosureRadar spokeswoman Michelle Lenahan said.

For example, about 5,700 homes in Contra Costa County are in some stage of foreclosure.

If homebuyers ?are wondering where their inventory is, it?s in all those homes in process but not making it to a trustee sale,? Lenahan said.

The shortage is driving up prices, which may be persuading some homeowners who have received default notices to delay seeking a short sale, said Steve Mun, a short-sale specialist with Keller Williams in Cupertino. Mun said he?s one of a group of preferred specialists two major banks refer people to when they send out default notices. ?But I?m not getting any calls,? he said.

?Lately everybody seems to be of the notion that housing is coming back,? Mun said. ?I?m sure that people in difficult situations are hoping that something can come of it, and maybe they will get a huge offer and get out of their situation.?

The reporter misses the mark here? they suggest that banks are somehow turning to short sales instead of foreclosing, but this simply isn?t the case. Short sales make up a larger percentage of the available homes for sale, but their absolute numbers are sharply down as well.

If, indeed, homeowners are holding out to get a ?huge offer? and ?get out of their situation,? then our problems aren?t solved. They are simply delayed a little while longer.

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Source: http://bayarearealestatetrends.com/2012/10/12/bay-area-foreclosures-down-half/

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