Continuing an encouraging trend, the number of Bay Area homes that wound up in foreclosure and were sold as a result fell in December, according to report Tuesday by a company that tracks the trend.
The decline, which mirrored the situation statewide, reflects the growing governmental pressure on banks to forgo foreclosure in favor of loan modifications or other less painful remedies for homeowners who are behind on their payments, some experts said. But advocates for those finding it tough to keep up with their mortgage obligations say many homeowners remain in deep financial trouble.
"It's good that the foreclosure rate is down," said Kevin Stein, associate director of the California Reinvestment Coalition, which monitors nonprofit groups that counsel people at risk of losing their homes. But he cautioned that "by no means are we done with foreclosures that are severely impacting families and neighborhoods."
Stein added that he continues to hear reports of struggling homeowners being shuttled from one bank official to another, and being shoved by banks into foreclosure even as they seek a loan modification. Both practices are outlawed under the California Homeowner Bill of Rights, which took effect on Jan. 1.
Notices of default -- the first step in the foreclosure process -- were down 17 percent overall from November in four East Bay and Silicon Valley counties, falling from 1,237 to 1,025, according to ForeclosureRadar.
The rate dropped about 3 percent in Contra Costa County, 10 percent in Santa Clara County, 14 percent in Alameda County and 62 percent in San Mateo County.
Sales of foreclosed homes in those four counties to third parties or to banks decreased nearly 12 percent from 582 in November to 515 in December. The number dropped from 102 to 96 in Santa Clara County, 53 to 47 in San Mateo County, 177 to 152 in Alameda County and 250 to 220 in Contra Costa County.
Madeline Schnapp, ForeclosureRadar's director of economic research, said the continuing plunge in the foreclosure rate reflects more than a dozen laws or related programs that are intended to delay or eliminate the likelihood of someone losing their home.
"It's been great for homeowners," she said. But Schnapp added that "there are 2 million homeowners in California that are still under water," meaning they owe more on their houses than the residences are worth. Those homeowners remain "trapped in a prison of debt," she said.
Schnapp said the number of foreclosed homes sold to third parties has increased in recent months as more investors -- including hedge funds -- have found it profitable to buy such properties. Looking ahead, she predicted the foreclosure rate would continue to decline and eventually return to what it had been before the housing market collapsed in 2008.
"We think you'll probably get back to normal, if nothing happens to disrupt the recovery, in probably another two to three years," she said.