Lenders Realise Billions in California Foreclosed Houses
According to ForeclosureRadar that monitors daily foreclosure activity in California, the lenders repossessed property worth $10.4 billion in foreclosure auctions where the units could not be sold to third parties. But despite this figure there seems to be an increase in investor activities in these auctions.
Foreclosure is a judicial process by which the lender takes the permission of the court to take over the property under mortgage to realize unpaid dues. The first step in the operation is the issuing of a default notice to the borrowers. These default notices decreased by 2.5% in May. In all there were 43,011 new foreclosure postings. The daily average filings jumped by 2.4% however, counting to 2.009 being noted each day.
The Notice of Trustee Sale is served after 3 months from the default notice. By it the date, time and location of the foreclosure auction is set. Trustee sale notices increased by 15.6% in May, counting to 34,564 new ones.
Auction sales increased by 11.8% counting to 25,523 houses. Of these 24,831 did not receive any bid higher than the opening bid and thus became the property of the lender of REO. This new REO lot of properties came to be valued at more than $10 billion – thus creating a record.
Although 97% of the units came back to the lender there was an increase in sales to third parties by 34.6%. This scurry in buyers is viewed as a renewed interest of investors in the discounted properties. Once more the nest builders and investors are getting an opportunity to snap up an affordable deal.
Sean O’Toole the founder of ForeclosureRadar comments that it seems lenders have at last overcome their stubborn and unrealistic attitude about opening auction bids. Finally they seem to have woken up to the immensity of the problem and beginning to offer appropriate discounts. 86% of all the houses going into foreclosure auction were offered discounts amounting to 28% on an average. Sacramento, San Joaquin, Stanislaus and Merced counties witnessed the largest discounts in opening bids – about 31% to 37%. Riverside in southern California and San Bernardino saw houses being offered 27.5% and 25% discounts respectively.
There was considerable housing sale activity in Riverside and San Bernardino – witnessing an increase of 22% in May. This was the highest in recent years.
California has been one of the top rankers together with Florida, Arizona and Nevada in the national foreclosure race.
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