With a tough Homeowner Bill of Rights set to take effect in California New Year's Day, cancellations of foreclosure auctions have spiked in the Bay Area and throughout the state, according to a report Tuesday.
ForeclosureRadar said cancellations jumped 60 percent in California from September to October, the biggest jump since it began tracking cancellations in 2006. Similar leaps in the number of cancellations were seen in the Bay Area.
Cancellations are attributed by the company to a successful loan modification or short sale, or are due to filing errors by the banks or are caused by rules requiring lenders to refile a notice of sale after extended postponements.
Joe Reichert of Keller Williams Realty in Danville said he's done 50 short sales this year but expects the number to decline as banks modify loans and more people hang on to their homes waiting until they are back above water and can sell for more than the amount of their mortgage.
"Fewer homes are in trouble," Reichert said. "There's a mentality of, 'I'm almost over the hump, and if I hold on a bit longer values will come up,'" he said.
There are still plenty of people in trouble with their mortgages, although the numbers are declining, said Martin Eichner of Project Sentinel in Sunnyvale, an authorized nonprofit that helps struggling homeowners.
"We had a foreclosure fair in San Mateo in October," he said, "and there was a line around the block before we opened
There were 517 foreclosure actions canceled in Santa Clara County in October, a 63 percent increase from September, ForeclosureRadar reported. That compared to only 138 auctions of foreclosed properties. San Mateo County had 209 foreclosures canceled, a 50 percent increase, while there were only 62 foreclosure sales.
Alameda County had 576 foreclosure cancellations, a 52 percent increase, compared to 238 foreclosure sales. Contra Costa County had 548 cancellations, a nearly 60 percent jump, compared to 308 foreclosure sales.
The Discovery Bay foreclosure tracking service said it was likely that the Homeowner Bill of Rights legislation due to go into effect Jan. 1 was behind the increase, as banks slow their push to sell properties at courthouse auctions and focus on working out short sales and loan modifications. A short sale is the sale of a property for less money than is owed on it.
The Homeowner Bill of Rights bans the notorious practice of "dual tracking" -- holding out the hope of a loan modification to struggling homeowners and then foreclosing without warning.
Notices of defaults were also down in the Peninsula and South Bay from the prior month, while they rose in the East Bay. These notices are the first step in the foreclosure process, which begins when a homeowner falls 90 days or more behind on mortgage payments.
The number of homeowners receiving these notices in October dropped 17 percent in Santa Clara County from the previous month and 19 percent in San Mateo County. The filings were up 18 percent in Alameda County and 4 percent in Contra Costa County.
All four counties saw drops in default notices from the previous year ranging between 45 percent and 62 percent.
Contact Pete Carey at 408-920-5419