Despite Freezes, US Still Racking Up Foreclosures

"Foreclosures decline, but more probably are out there"

11:42 PM PDT on Wednesday, October 13, 2010

By JACK KATZANEK
The Press-Enterprise

Foreclosure-related activity in Inland Southern California is still declining from where it was a year ago, a report released Wednesday found, but analysts say more distressed housing will probably hit the market in the coming months.

There were 7,454 homes in some phase of the foreclosure process in Riverside County in September and 6,244 in San Bernardino County, according to a report from RealtyTrac, an Irvine-based online marketer of foreclosure properties.

That's 16.37 percent fewer than September 2009.

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Foreclosure actions did increase 6.6 percent from August of this year, RealtyTrac reported. One in every 103 homes was somewhere in the foreclosure process in Riverside County, and one in every 110 in San Bernardino County.

Actions that include notices of default, trustee sales and repossessions were down slightly in the two Inland counties -- less than 1 percent -- in the third quarter of the year from the second but down more than 25 percent from the third quarter of 2009.

September was the ninth straight month Inland Southern California has seen fewer foreclosure-related actions than the same month in 2009 and the 10th consecutive month statewide, said RealtyTrac analyst Daren Blomquist.

Part of that is because lenders are more inclined to work with homeowners to devise some sort of workout program, including short sales, which allow borrowers to sell the house for a price that's greater than what they owe, Blomquist said.

Also, many of the banks holding mortgages of homeowners in trouble are not rushing to put foreclosed homes up for sale, meaning many more distressed properties could eventually hit the market. This leads Blomquist to call the decline "deceptive."

"It is good these numbers are going down, but California and the Inland Empire are not out of the woods yet," Blomquist said.

"There are still a lot of distressed properties out there to deal with."

Government officials are currently sorting out whether banks followed the proper procedures when foreclosing on hundreds of thousands of properties across the country, and that might slow foreclosure processes in the fourth quarter.

Blomquist said a fresh flood could happen next year.

Rich Simonin, owner of Westco Realtors in Riverside, agreed that there are a lot more properties that might be foreclosed on and hit the Inland sales market. But he said the banks are hesitant to put these properties on the market, and he said he's not sure that's the best strategy.

"The banks will release those homes in drips, and not in a flood," Simonin said. "I think that just extends the foreclosure issue in our market. It would be better for us if we can sell these homes. Then we can move on."

Inland homeowners received more than 15,000 default notices -- the first phase of the foreclosure process -- in the third quarter.

These notices are usually sent when a person is 60 or 90 days late with a payment.

In the second quarter there were fewer than 13,000 default notices, and Chapman University economist Esmael Adibi said that suggests more homeowners are having trouble making ends meet.

Adibi said that a true recovery in the housing market happens when prices hit bottom, and the distortion caused by an investigation of paperwork issues could delay that.

But he said he agrees with the banks' strategy of holding back on foreclosures.

"They don't want to flood the market," Adibi said.

"That would be bad for all the other homeowners."

Source: The Press Enterprise