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New laws help reduce foreclosures

Many area bank-owned houses remain, this one on Lookout Drive near Fine Avenue in Modesto. (Joan Barnett Lee / The Modesto Bee)
Many area bank-owned houses remain, this one on Lookout Drive near Fine Avenue in Modesto. (Joan Barnett Lee / The Modesto Bee)

Let's call this positive news about foreclosures: The number of Northern San Joaquin Valley homes repossessed by banks during March was the lowest for any month during the past year.

But don't get too cheerful, because a staggering number of homes received notices of default — the first step in the foreclosure process — last month.

The decline in final foreclosures in large part has been credited to changes in state law that have forced lenders to go through more steps before repossessing homes with unpaid mortgages

That change only postponed the process, it didn't fix the problem, warned Sean O'Toole, whose ForeclosureRadar company tracks all California foreclosure proceedings.

In Stanislaus County, lenders took back 311 homes in March, according to ForeclosureRadar. During the past two years, nearly 12,195 Stanislaus homes have been lost to foreclosure.

Stanislaus homes foreclosed last month cost lenders nearly $115.6 million in unpaid mortgages, bringing the two-year loss to $4.1 billion

During March, 1,169 Stanislaus homeowners were issued formal notices of default, warning them they'll lose their homes if they don't catch up on mortgage payments. It's expected to take at least four months before lenders can take back those homes.

In Merced County last month, 185 homes were lost to foreclosure, bringing the two-year total to 6,655. Bad mortgages there cost lenders $115.1 million last month and nearly $2.7 billion over the past two years.

In San Joaquin County last month, 409 homes were lost, bringing the two-year total to 17,327. Lenders there lost $153.7 million last month and $7 billion over the past two years.

That means the Northern San Joaquin Valley has lost 36,177 homes to foreclosure and lenders have lost $13.8 billion in unpaid mortgages over the past two years.

And it looks as though more bad news is ahead.

Statewide, a record 54,268 notices of default were filed in March, about 25.8 percent higher than any other month in history, according to ForeclosureRadar.

"Not one government program aimed at addressing the foreclosure problem has dealt with the core issue of negative equity," O'Toole said. "The only tangible effect of these programs so far is a significant increase in uncertainty for homeowners, lenders, investors and even government officials trying to make sense of these wild swings in activity."

A shockingly high percentage of Northern San Joaquin Valley homeowners are delinquent on their mortgage payments, according to recent calculations by First American CoreLogic, which gathers statistical data about real estate.

For Stanislaus homeowners with mortgages, 11.5 percent are 90 days or more behind on their mortgages. The delinquency rate is 16.5 percent in Merced and 12.2 percent in San Joaquin.

By comparison, 7 percent of California homeowners and 5 percent of U.S. homeowners are 90 days late paying their mortgages.

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