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Foreclosures Up…But Pre-Foreclosures Down In 4th Quarter: Could The End Be In Sight?
January 29th, 2009 categories: Contra Costa, Foreclosures / Short Sales, Market Update, Solano
Even though foreclosures in the fourth quarter were up substantially over the same period a year earlier, the number of pre-foreclosures actually dropped throughout the state in the last quarter of 2008, compared to the last quarter of 2007, according to a just-released report from real estate data guru Dataquick.
Statewide, notice of default recordings were down 7.7% during that period, but here in the Bay Area they were down 12.2%, led by Solano County, which had 20.9% fewer NOD’s recorded in the last quarter of ‘08 than during the same quarter of ‘07. Contra Costa was down 17.6%.
When a Notice of Default is recorded, that signals the “official” start of the foreclosure process. From that date, the borrower has three months to bring the loan current. If that doesn’t happen, then the lender can foreclose three weeks later.
So NOD recordings are a very reliable gauge of how many foreclosures are coming down the pike four or five months later.
On the surface that would seem to indicate that perhaps the worst is now behind us. But before you jump to such conclusions, consider a few things that could point to the contrary:
- The state passed a law prior to the fourth quarter (SB 1137) requiring lenders to contact borrowers to discuss alternatives to foreclosure at least 30 days prior to recording a NOD. So some NODs that might have normally been recorded during the fourth quarter may have simply been delayed several months by lenders complying with the new law.
- Once the moratorium on foreclosures by Fannie Mae & Freddie Mac from late November to the end of January comes to a close, the rumor on the street is that there will be a flood of new foreclosures. If that causes property values to drop further, it could force yet more people to throw in the towel, which would signal an increase in NOD recordings. And that would mean more future foreclosures.
While NOD recordings were down, Dataquick’s fourth quarter figures showed actual foreclosures up substantially during that same period of time. Statewide, there were 45.8% more foreclosures in Q4 of 2008 than 2007. Solano County, at 51.7 was a bit lower than the Bay Area average of 67.9%. Contra Costa had 48.3% more foreclosures in ‘08, almost identical to the statewide average.
For a complete county-by-county list, CLICK HERE.
