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Foreclosure Notices are down in Santa Clara, and the rest of California too

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By : John Smith    99 or more times read
Foreclosure news is not all bad throughout the States. In Santa Clara County in California default notices shrank 35.1% between the first quarters of 2009 and 2010. This maps across to state-wide trends as well – the State of California recorded an average drop of 40.2% in default notices over the same period.

What’s not clear, however, is the extent to which these improvements represent real changes in market conditions, as opposed to shifting lender policies.

According to one leading market analyst these results may be a sign that the worst is nearly over for entry-level markets, although troubles are still spreading to more expensive neighborhoods. Adding mud to the water, though, is the difference in the way hard and softer lenders tackle re-mortgages and short sales.

Front end foreclosure notices in Santa Clara County during January to March 2010 were a total of 2,656 compared with a daunting 4,090 during the same period in 2009. Final foreclosures were also down by 7.6% in the last quarter of the same year. A year ago the more affordable housing sectors accounted to 47.5% of default activity – that’s down to 41% according to the latest figures.

But does this reflect a real improvement in the lower end, or more trouble higher up in future? My insider edge in one of the larger banks favors a positive approach. While it’s true,” he told me, “that the upper markets have seen a slight rise in defaults compared to a year ago, buyers at that end put more money down when they purchased their homes, and have periscopes to stay above water.”

During the first quarter of 2009, Californian primary mortgage households were an average of five months behind when they received their default notices, and their arrears were an average $14,066 on a median $330.147 mortgage. Foreclosures finalized in the first quarter of the current year took an average 7.5 months to complete, compared to 6 months a year ago. Does this reflect lender backlogs, or is the process taking longer because of HAMP? In the first quarter of 2010 foreclosure sales were more than 42% of all California re-sales, again down from last year, and this time from 57.8%.

The above results have generally speaking been well received by market analysts who are advising cautious optimism. “The important thing is to send the right message back into the market,” my banking insider advises. “Consumer confidence is like a delicate plant, and must be carefully nurtured.”

Although some of these statistics may remain confusing, they do seem to indicate that the situation in California is improving.
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