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California Default Notices Hit Lowest Rate in Three Years, But Repossessions Increase

July 22, 2010

As San Bernardino loan modification attorneys, we were interested to see a piece saying California is seeing its lowest rate of default notices in three years. Default notices are the first step toward a foreclosure, and according to a July 22 article in the Los Angeles Times, the number of such notices dropped dramatically in the second quarter of this year. Statewide, default notices dropped 43.8% over the same quarter in 2009 and 13.6% over the first quarter of 2010. Here in Southern California, the plunge was even more pronounced, at 46.9% over the past year and 15.23% over the first quarter. Troubled Riverside County saw the biggest one-year drop at 49.2%. The numbers come from MDA DataQuick, a real estate information company based in San Diego.

The article suggested that the drop may be due to a slight increase in housing prices and increasing willingness by banks to consider short sales and other foreclosure alternatives. Increased housing prices put fewer homeowners underwater, which economists believe means fewer of them will consider walking away from their mortgages. Furthermore, the article noted, the housing crisis has forced banks to tighten their lending standards dramatically, which means newer loans are more likely to be performing well, and that underperforming subprime loans have not been written. However, the article also said that lenders have increased their seizures of homes that have already been foreclosed on, which have been in foreclosure for an average of 9.1 months. Banks feel increasing pressure by federal regulators to get those loans off their books, the article said, and one result is that trustee's deeds in California are up 11.2% from the first quarter and 4.4% from last year.

Our Chino Hills loan modification lawyers hope the trend toward fewer foreclosures lasts, because a housing recovery would benefit our clients and almost everyone else. We believe the decrease in new foreclosures may have something to do with home prices bouncing back, but we also suspect that the market is simply running out of loans that are candidates for foreclosure. This far into the housing crisis and the recession, many folks who are in serious financial straits have made decisions about how to handle their mortgages, or had decisions forced upon them. And as the article notes, tighter lending standards mean fewer bad loans have been written in the past year or so. We'd also like to note that the large amount of homes that have been foreclosed on for months but not seized seems a lot like a "shadow inventory." We hope lenders are responsible in the way they put these homes on the market.

Howard Law PC represents borrowers who are trying to deal with a shaky financial situation by negotiating for a modification of their mortgage. Over and over, homeowners in this situation tell us about lenders that ignore their phone calls, route them from desk to desk, repeatedly lose paperwork and otherwise engage in practices that delay and deny them any help with a loan workout. We believe these stories are common because they are part of a concerted effort by lenders to avoid granting loan workouts while pretending they do so, causing borrowers a lot of unnecessary heartache. Our Mission Hills loan modification lawyers help clients fight back, through aggressive negotiations and, when necessary, lawsuits to enforce their rights. We want every client to leave with a sustainable, achievable monthly mortgage payment.

If you've been struggling with your lender for months but can't get a straight answer on a loan modification, you should call Howard Law today. For a free consultation, you can send us an email or call 1-800-872-5925 today.