The San Diego Associated Press reported that Banks sent nearly 26 percent more default notices to California homeowners in the third quarter compared with the previous three months, stepping up actions against those with delinquent loans in what may herald a new wave of foreclosures, a real estate information service reported Tuesday.
There were 71,275 first-time notices of default issued in the California, the nation’s most populous state, in July, August and September, DataQuick reported. By comparison, there were 56,633 default notices issued in the second quarter of the fiscal year, a three-year low. “Obviously, some lenders and loan servicers have begun to plow through their backlogs of delinquent loans more aggressively,” DataQuick President John Walsh said in a statement.
Most of the mortgages, home equity loans and lines of credit going into default are from 2005 to 2007, La Jolla-based DataQuick said.
Foreclosures weigh down home values and create uncertainty among would-be homebuyers who fret over prospects that prices may further decline as more foreclosures hit the market. Default notices were filed against California homeowners who, using median figures, owed $19,198 on a primary mortgage of $331,333 and were eight months behind on payments, DataQuick said. The median amount borrowers owed at the time the default notice was filed rose about 17 percent from the previous quarter and 27 percent from a year earlier. “The gains likely stem from some lenders working faster last quarter to get caught up on their backlogs of long-delinquent loans,” a DataQuick statement said. On home equity loans and lines of credit in default, borrowers owed a median $4,576 on a median $70,055 credit line. The foreclosure process can take nine months or more to complete.
Foreclosure activity began to slow nationwide last year after allegations that lenders were using abusive practices such as “robo-signing,” or approving foreclosure paperwork without actually reading it. The number of default notices in the third quarter of 2011 was down 14.4 percent from the third quarter of 2010 -- before most of the delays began. Major banks and attorneys general in all 50 states have been working on a settlement of the allegations, but California Attorney General Kamala Harris announced last month that she would not agree to a settlement. Harris said the deal was inadequate in a state where more than 2.2 million residents owe more on their mortgages than their homes are worth. Poorer neighborhoods had more defaults than richer ones in the third quarter. Areas where the median sale price of a home was below $200,000 had 11 defaults notices filed per 1,000 homes. That compared with 2.8 filings per 1,000 in areas with median prices above $800,000. Statewide, there were 8.1 notices of default filed per 1,000 homes.
In today’s market, the real remorse is often felt by sellers who have to do a short sale. They feel stupid for having made a bad investment, ashamed about not being able to pay off a debt they agreed to repay, and embarrassed that have to share this “dirty laundry” with a Realtor, who is there to help them. They are often very depressed about the damage to their future caused by a loss of equity. It can be demoralizing. Now, combine that with some buyers who are trying to get a “steal” and putting in ridiculously low offers, and we’ve got a challenging situation all around. Helping sellers understand that they’re in the same boat as many other Americans, many of whom are quite intelligent and wealthy helps, as does the fact that since the market is down, they can hopefully soon buy low to compensate for having to sell low.
Trust me, realtors are not judging you. Many of us have gone through the same thing and have friends and relatives who have also. It’s often the inability to accept current realities that keep people from moving forward in these situations. If Realtors can help you through the issues, you can make some serious progress. As real estate practitioners, we sometimes forget what it’s like to walk into this incredibly complex world of buying and selling with little or no knowledge of how the whole thing works. We sometimes forget that there are people behind the doors of those houses and more is going on in their lives and in their minds than just this transaction. We deal with the people, not the house, and with the whole person, not just the issues surrounding the transaction.
When we can put ourselves in your shoes, imagine what you may be dealing with, and have compassion for what you’re going through, it’s then that we are most effective. Realtors strive to deal with the whole person and are willing to counsel and help, when possible with your situation. Whether you are buying or need to sell, call a local Realtor and get the assistance that you need. Having the banks work through these properties is actually a good thing and will help us get back to a normal housing market some day and housing tends to lead the economy.
Questions or comments can be made to Kerry Suess at firstname.lastname@example.org.