South Orange County Blog from Bob Phillips

Loan modifications and short sales are gaining traction in California

Posted in Foreclosures, Loan modifications, Real estate, short sales by southorangecounty on May 16, 2010

ForeclosureRadar: Cancellations up 174% year-over-year

Foreclosure cancellations in California skyrocketed 174 percent year-over-year in April, according to a report by foreclosure data company ForeclosureRadar.

At the same time, foreclosure filings in the Golden State fell month-to-month for the first time since January. Notices of default fell 41.2 percent year-over-year and 16 percent month-to-month, while notices of trustee sale were down 3.1 percent year-over-year and 10.3 percent month-to-month.

Cancellations jumped 11.4 percent month-to-month and 174.4 percent since April 2009.

“The steady rise in cancellations leads us to believe that loan modifications and short sales are gaining traction,” said Sean O’Toole, founder and CEO of ForeclosureRadar.com, in a statement.

“I’d caution, however, that cancellations also occur due to filing errors and extended postponements, which require the notice of trustee sale to be re-filed. In fact, 14.6 percent of new notice of trustee filings in April were on previously canceled foreclosures.”

Cancellations are one of the three possible foreclosure outcomes ForeclosureRadar tracks. The other outcomes — the property’s return to the bank as an REO and sale to a third party — also shot up year-over-year: 19.5 percent for REOs and 158.6 percent for third-party sales.

Total foreclosure inventory — which includes preforeclosures, properties scheduled for sale and REOs — was down slightly: 2.2 percent month-to-month and 2.5 percent year-over-year. Properties scheduled for sale rose about 50 percent while preforeclosures and REOs fell nearly 20 percent each.

As in March, the amount of time banks took to foreclose on a property jumped: 40.1 percent year-over-year and 6.2 percent month-to-month, to 239 days. It took banks 5.56 percent longer year-over-year (247 days) to resell a property in April after taking it back. For third parties purchasing properties at trustee sales, time to resell fell 17.4 percent to 162 days.

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