Foreclosure filings dropped sharply last year in most Bay Area counties, according to a year-end report Thursday by RealtyTrac, as a robo-signing scandal forced banks to hold off on seizing homes of delinquent borrowers.
Also behind the drop may be more short sales, in which homes are sold for less than what is owed on them, as well as a growing number of loan modifications under government programs.
Filings in Alameda, Contra Costa, Santa Clara and San Mateo counties were down about 20 percent from 2010, according to the Irvine foreclosure tracking company. They were down 21 percent in California and fell by 34 percent in the U.S.
But the slowdown in foreclosures is not expected to continue this year, as banks work through a backlog accumulated last year.
A lull during the holidays had December foreclosures hitting a 49-month low in Santa Clara County and a 13-month low in Contra Costa County.
The slowdown last year bought homeowners more time to do short sales and modifications, said Daren Blomquist of RealtyTrac.
But there are plenty of complaints that negotiating modifications with banks can turn into a years-long affair.
Cliff Wells started on a loan modification for his Los Gatos home in December 2008 when he was worried about layoffs. He's been negotiating "on and off" with the lender for more than three years, during which he lost his job and landed another. Meanwhile, he said, "the better part of close to $400,000 in equity has disappeared" as home prices fell.
Though the bank foreclosed on him in October, it is now offering to reopen the modification, according to Wells. So the process continues. "It's the most frustrating thing I've ever done in my life," he said.
The long-running scandal over lenders caught using machines to sign foreclosure notices slowed things for most of last year, with filings rising again only in the final quarter.
Now there are "strong signs" that lenders are beginning to push through foreclosures again, said Brandon Moore, chief executive officer of the Irvine foreclosure tracking company.
The average time to foreclose declined in the fourth quarter to 352 days in California, down from 363 days in the third quarter.
Foreclosure filings include default notices, the first step against homeowners delinquent more than 90 days on payments, to the actual auction of the house.
Santa Clara County had 1,234 foreclosures in December, a drop of 38 percent from November's 2,012 foreclosures and down 27 percent from the 1,691 foreclosures in December 2010.
Most Bay Area counties saw December declines, but not as steep as Santa Clara County's. Contra Costa and Alameda counties were almost tied for the number of foreclosures -- slightly more than 2,000 in each county, a 12 percent drop for Contra Costa and a 3 percent increase in Alameda. San Mateo County's 674 foreclosure filings were down 7 percent from November's 730 but up 14 percent from December 2010.
Last year, Contra Costa County had the highest rate of foreclosures in the South Bay and East Bay, with slightly more than 4 percent of all homes, or one in every 24. San Mateo County had the lowest rate of foreclosures -- one in every 60 homes, or about 1.7 percent. In Alameda County, 2.7 percent of all homes had some kind of foreclosure action in 2011, while less than 2 percent of Santa Clara County homeowners were affected.
Contact Pete Carey at 408-920-5419.