Are Foreclosures On The Move?

It has been a number of months since there has been a significant increase in the Notices of Defaults filed at the Santa Barbara County Recorder. As a matter of fact, they had appeared to be on the decline since June of 09.

February changed all that!

The county is reporting that there were 240 recorded in February.

That is the largest number of NOD's recorded since October and a 52% increase over January.

Is this the second wave or just an anomoly?

Stay tuned!

Foreclosure Data Showing Some Signs of Slowing

The most recent foreclosure information here in Santa Barbara County certainly needs some interpretation. For the months of September, October, & November the number of recorded defaults was down significantly. There is an easy explanation as to why this happened.

Banks in California had a new requirement put on them before they could record a notice of default. They had an extra step or two added to their process. Making an extra effort to contact any borrowers that were in default before recording the notice of default slowed up that process and we experienced the slowing of those recordings as was obvious during those months.

It is also why I believe the December and January numbers are a little inflated.

If you use that information to adjust the number of notices of defaults filed in December I think that number should be much less than the number in December of 2007. January 2009 is already lower than January 2008, but it would be an even larger seperation after adjusting the numbers.

The other 2 categories that are being tracked on this chart are also showing a softening of the foreclosure market here in Santa Barbara. Could that be due to the same issue the banks faced regarding contacting the borrowers that were in default, possibly. 

There has been quite a bit of talk recently about loans that are scheduled to adjust this year and how that is going to cause the foreclosures to increase again. I'm not so sure that we are going to see the impact some people are expecting. With the surge in refinancing and the banks learning how to handle loan modifications many of these loans that are expected to recast may be off the books. 

Time will tell though. Stay tuned!  

Santa Barbara County Foreclosure Trends

In reviewing the June numbers for Santa Barbara County you can see that the number of Notices of Defaults that have been recorded have not slowed down in recent months. On the other hand they haven't increased significantly either.

This number could be impacted in future months by new legislation that has been signed by the Governor. The new bill makes the lenders who are wanting to record Notice of Default go through a more stringent effort to contact and help out the borrower. If you would like to read more detailed information on this new legislation please check out the California Land Title Association website.

Staying with, the it hasn't changed much in the last few months theme, neither has the number of loans that are scheduled to adjust. It was 171 in April, 180 in May, and 182 in June. I do know that the number jumps to 228 in September and then is back down to 160 in November. This may cause a small spike in Notice of Defaults sometime after September.

The number of trustees deeds that recorded in June dropped a tiny bit from the 180that recorded in May. The 175 that recorded in June certainly isn't representative of a slow down, but the good news is that number didn't increase. I would hope the lenders are working out loan issues with the borrowers and aren't having to take back as many properties. This is probably wishful thinking, but it also sounds like the right thing to do.

The number that did rise significantly was the number of REO properties that sold. This is terrific news because the faster the REO product is sold the quicker the real estate market will get back on it's feet. The June number rose to 50, where the May number was 36 and the previous high was in April at 37. This is a 35% increase over April.

My final thoughts about the foreclosure market are mostly anecdotal. I have been hearing that the lenders are as aggressive as they have to be in pricing their properties. This may not help the median prices of the areas with foreclosures, but it will help move this property more quickly which in the end shortens the amount of time these properties will affect the surrounding neighborhoods. We have been handling many more short sale escrows recently and I have to believe that is also good news for the market. My last thought is that the foreclosures will be around for a while longer, but everyone involved is getting better at processing them which should lesson the influence they have on the real estate market.

See You In Escrow!

Santa Barbara County Foreclosure Trends

I have been formally watching these numbers now for about 8 months. I wish I could say that I have a good handle on what to expect next.

My opinion on what's next seems to change by the day.

Certain people I speak with seem to think that the market that has been affected by the foreclosures is getting healthier. More of these foreclosed properties seem to be selling more quickly and buyers are thinking the prices they are paying are very good. This is evidenced by the increase in the number of sales we have seen in Santa Maria, Lompoc, & Goleta in recent months.

On the other hand some people are telling me they think that we are going to see many more homes go in to foreclosure. Reason being current loans that are adjusting are going to continue to raise a borrowers payment. These borrowers may find themselves in a situation where they don't have any way to refinance out of these loans.

I do know that getting a loan these days is much more difficult than it had been in previous years. Some lenders are still calling Santa Barbara a declining market so they will take 5% right off the top of the appraisal before determining how much they will loan a person. An 80% loan to value (that is after the 5% reduction) appears to be about as high as most lenders are willing to go.

Probably the biggest change in qualifying for a loan is how the lenders are looking at the ability to pay the loan back. A borrower must prove to a lender exactly what their income is. In the past many lenders didn't go through the process of tax returns etc... they only required you to state your income without backing it up.

Enough of this education on qualifying for a loan, what about the foreclosure market?

In looking at the numbers, Santa Barbara County is seeing an increase in the number of Notice of Defaults being recorded. Maybe we have seen this peak since the April number was a little higher than the May figure.



The number of properties going to the lender or a successful bidder at a foreclosure sale has been increasing slightly. This is represented on the chart by the Notice of Trustee Sale documents that have been recorded.

As I mentioned earlier the banks have been selling more properties as well, which is displayed by the REO number in the chart.

What does it all mean? Who can really tell, but here is my superfluous analysis of the information I have. I don't believe we will see the number of foreclosures climb much higher than it is now. There will be an increase but with the number of loans that are adjusting leveling off I believe so will the foreclosures. One thing to watch are interest rates. If they go down at all then refinancing might become an option again for homeowners who are having their payments increase due to a loan adjusting. This last scenario would be the best thing for everyone.

Santa Barbara California Foreclosure Trends

The trends for Santa Barbara County's foreclosures haven't changed much in recent months. All the areas I am tracking are up a bit. This seems to be the same trend we saw last month with the exception of the number of trustees deeds.

I am trying to put this in to perspective with the number of sales that occurred in Santa Maria and Santa Barbara in April. Santa Maria which had been hit hardest by the foreclosure problem had a terrific month regarding the number of sales. The Santa Barbara area also saw an increase in sales with the community of Montecito setting the pace.

Now back to the foreclosure topic;

The number of REO sales in April is the highest it has been since I've been tracking this information. I think it is about time these properties stopped sitting on the market and started moving. With rates being excellent, unemployment low and prices down I would think properties will be getting snapped up. This may be caused by a number of different issues.

1. The number of REO's could just be mirroring the number of trustees deeds recorded
2. The market is seeing these properties move more quickly.
3. Come to think of it, it could certainly be a combination of both.

I think it is about time these properties stopped sitting on the market and started moving. With rates being excellent, unemployment low and prices down I would think these properties should be getting snapped up.

One fact does remain though, there were more sales and that is a good thing. An REO listing just by it's very nature gets lots of attention from buyers, but now it would appear they are getting more than attention, they are getting new owners.

See You In Escrow!