California Foreclosure Activity Back Up

After dropping to a three-year low in the second quarter of this year, the number of California homeowners being pulled into the foreclosure process snapped back to prior levels over the last three months, a real estate information service reported.

A total of 71,275 Notices of Default (NoDs) were recorded at county recorders offices during the third quarter. That was up 25.9 percent from 56,633 for the prior three months, and down 14.4 percent from 83,261 in third-quarter 2010, according to San Diego-based DataQuick.

Last quarter's 71,275 NoDs, which mark the first step in the formal foreclosure process, jumped back to levels seen earlier this year and late last year. Lenders filed 68,239 NoDs during first-quarter 2011 and 69,799 in fourth-quarter 2010. NoDs peaked in first-quarter 2009 at 135,431.

Most of the loans going into default are still from the 2005-2007 period: the median origination quarter for defaulted loans is still third-quarter 2006. That has been the case for almost three years, indicating that weak underwriting standards peaked then.

The most active beneficiaries in the formal foreclosure process last quarter were Bank of America (14,325), Bank of New York (11,052), and Wells Fargo (9,740).

The most active trustees, companies doing the actual foreclosing, last quarter were ReconTrust Co (mostly for Bank of America and Bank of New York), Quality Loan Service Corp (Bank of America), California Reconveyance Co (JP Morgan Chase), Cal-Western Reconveyance Corp (Wells Fargo) and NDEx West (Wells Fargo).

Defaults by price segment show that distress is not spread evenly, with lower-cost neighborhoods bearing the brunt. Last quarter, zip codes with year-to-date median sale prices below $200,000 collectively saw 11.0 default notices filed per 1,000 homes. That compares with 8.1 NoDs filed per 1,000 homes for all zip codes statewide, and just 2.8 NoD filings per 1,000 homes in zips with medians above $800,000.

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