California foreclosure starts fall to 8-year low

 

The Associated Press

The number of default notices — the first step in the foreclosure process — sent to California homeowners slid to its lowest level in more than eight years in the spring as higher home values left fewer homeowners underwater, a research firm said Thursday.

There were 17,524 default notices filed from April to June, down 8.8 percent from 19,215 in the first quarter and down 31.9 percent from 25,747 in the second quarter of 2013. It was the lowest level since the fourth quarter of 2005, when 15,337 notices were filed.

Most home loans going into default originated from 2005 to 2007, when home prices were skyrocketing. The median origination date of defaulted loans was the third quarter of 2006, as it has been for the last five years.

California's median sales price for new and existing houses and condominiums reached $393,000 in June, the 28th straight annual increase and the highest level since December 2007. While price increases have cooled since last year, the rally has left fewer people in danger of losing their homes because they no longer owed more than their properties were worth.

Foreclosure starts have held fairly steady for 1 1/2 years, despite a one-time jump in the second quarter of 2013 as lenders adjusted to new state laws to protect distressed homeowners, said DataQuick analyst Andrew LePage. The laws — which required 90-day eviction notices and banned foreclosures while loan modifications were being negotiated — led to a drop in starts when they took effect in January 2013 and an increase during the second quarter as lenders caught up.

Default notices tumbled 39.6 percent from last year in the nine-county San Francisco Bay Area, 36.5 percent on the Central Coast, 31.3 percent in a seven-county region of Southern California and 28.8 percent in the Central Valley.

Among the state's largest counties, loans were least likely to go into default last quarter in San Francisco, Marin and San Mateo counties, DataQuick said. The probability was highest in Tulare, Madera and Fresno counties.

There were 7,392 foreclosures completed during the second quarter, down 24.9 percent from the same period last year. It was the lowest level of completed foreclosures since the fourth quarter of 2006, when the number stood at 6,078.

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