DataQuick: Foreclosures in San Diego County fall to lowest level since '07
By Lily Leung
Tuesday, January 25, 2011 at 12:40 p.m.
/ Union-Tribune staff
Foreclosures and defaults have dropped to their lowest levels in San Diego County since November 2007, according to the latest figures from DataQuick Information Systems.
Reaction from experts
- Michael Lea, director of the real estate center at San Diego State University: The fact that defaults are falling is good news. On the dip in foreclosures, "I wouldn't read much into that...there's been a slowdown in foreclosure actions by a lot of the lenders..."
- Bob Kevane, president of the San Diego Association of Realtors: He expects to see a steady stream of both foreclosures and defaults this year, and a flattening of median home prices.
- Andrew LePage, DataQuick analyst: It looks like San Diego and the rest of California have moved past the bulk of "the most egregious subprime and other risky loans from the boom period" and may see more stability this year.
Foreclosures and mortgage defaults in San Diego County fell to their lowest levels in three years, but industry experts say it may be too early to rejoice.
Foreclosures decreased from 13,978 in 2009 to 11,976 in 2010, a 14 percent drop, show figures from DataQuick Information Systems on Tuesday. Defaults, the first step in the foreclosure process, followed the same trend. They dipped from 35,215 in 2009 to 22,414 in 2010, or 36.4 percent. (Read the company's statewide overview here.)
The reason for the drops remains murky, but experts chalk up the decreases to an improving economy, a shadow inventory of distressed homes and an increase in short sales.
“On the foreclosure decrease, I wouldn’t read much into that,” said Michael Lea, director of the real-estate center at San Diego State University. “There’s been a general slowdown in foreclosure actions by a lot of the lenders, so there’s uncertainty of what’s out there.”
Most real estate experts agree San Diego County will see another wave of foreclosures this year, some even saying that 2011’s tally will eclipse last year’s.
Lenders who held onto bad loans to lessen their losses and revise questionable procedures are expected to release those loans, leading to an increase in default notices and foreclosures, Lea said. Questionable practices included banks employing robo-signers, who signed off on loan paperwork without proper review.
When this surfaced, the country’s largest banks froze foreclosure activity to improve standards.
While it appears that most of these questionable practices occurred outside of California, Bank of America on Tuesday said during the halt on foreclosures in the fall, it stopped delivering default notices as well here.
“I would think that would account for the majority of the decrease,” said Bob Kevane, president of the San Diego Association of Realtors. “I don’t see those kind of decreases in the next quarters.”
Kevane expects more foreclosure and short-sale activity this year as the robo-signing mess is straightened out and banks clean out their distressed inventory.
DataQuick analyst Andrew LePage said the state, including San Diego County, has likely surpassed “the most egregious” phase of subprime and other risky loans,” but agrees that more foreclosures are coming as lenders work through their long backlogs. LePage added that San Diego may see an increase this year in short sales, less expensive alternatives to foreclosures.
Looking at the monthly figures, San Diego County foreclosures and defaults fell during three consecutive month-over-month periods.
In December, 715 homes were foreclosed on, down 1.1 percent from November.
That's the lowest level since November 2007, when there were 478 foreclosures.
Defaults totaled 1,522 in December, down 8.3 percent from November. That figure is the lowest it's been since November 2007, as well.
