The number of Bay Area homes that were in some stage of foreclosure fell by almost 5 percent in 2010, a better showing than what transpired last year at the national level.

The improvement may be an encouraging sign locally in the 4-year-old foreclosure crisis, but what happens with unemployment, the housing market and the slowly improving economy could bring a new wave of foreclosures in 2011, analysts said.

A total of 51,525 homes in the Bay Area were in some stage of foreclosure in 2010, a 4.7 percent decrease from 2009, according to a RealtyTrac.com report to be released Thursday. RealtyTrac.com defines the Bay Area as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties. In the Bay Area, there was a 25.6 percent drop in notices of default, the first stage in the foreclosure process.

Daren Blomquist, marketing and communications manager for RealtyTrac.com, said the decrease in foreclosure activity seen in the Bay Area and in California is likely to be temporary.

"From what we are seeing, lenders are taking a lot longer to push someone to foreclosure, even if they miss quite a few monthly payments," Blomquist said. "Number one, the lenders are somewhat overwhelmed with (the foreclosures) they are dealing with. And secondly, I do think the lenders have shifted in the way they are dealing with bad loans. Many of the major lenders are not seeing foreclosure as the first option (and are turning to) loan modification and short sales."

However, it is possible that many of foreclosures that have been delayed for one reason or another could end up being processed this year if the foreclosure alternatives do not work out, Blomquist said. "We believe there are a lot of loans that are delinquent that have not entered the foreclosure process."

Shadow inventory also remains a factor.

"There is a backlog of inventory of homes that are in the process of being foreclosed, or are already foreclosed and are yet to be listed. There is a lot of inventory that has yet to hit the market," said Faramarz Moeen-Ziai, a mortgage banker with San Ramon-based Bank of Commerce Mortgage.

Nationally, a record number -- almost 2.9 million homes -- are in some stage of foreclosure, or an increase of 1.7 percent from a year ago. Foreclosure activity involves three stages: receiving a notice of foreclosure after missing several mortgage payments; a notice-of-trustee sale, which clears the way for a home to be sold at auction; and when homes are taken back by banks.

"Total properties receiving foreclosure filings would have easily exceeded 3 million in 2010 had it not been for the fourth-quarter drop in foreclosure activity -- triggered primarily by the continuing controversy surrounding foreclosure documentation and procedures that prompted many major lenders to temporarily halt some foreclosure proceedings," said James Saccacio, chief executive officer of RealtyTrac.com.

The unemployment picture will have to improve to make it easier for people who are facing foreclosure to be able to stay in their homes, Moeen-Ziai said. An improving employment picture also would help stimulate sales of foreclosed properties and thus help reduce their supply.

"We need to pick up on the demand side, because the supply side is going to stay constant or be increasing in the foreseeable feature," he said.

For the month of December, a total of 6,115 homeowners in the Bay Area were in some stage of foreclosure, a 9 percent increase from November, but a 25.5 percent drop from December 2009.

In the East Bay, there was a sharp increase in homes becoming bank owned properties from November to December. "I think from month to month you are going to see fluctuations as things pop through the process," Moeen-Ziai said.

Alameda County saw 1,000 notices of default last month, or a 19.5 percent drop from November, and 15.8 percent decrease from December 2009. Another 445 homes became bank-owned properties, or a 21 percent gain from November, but a 38.9 decline from a year ago.

Contra Costa County saw 873 notices of default last month, or a 11.9 percent drop from November and a 10.6 percent decrease from December 2009. Another 505 homes became bank-owned properties, or a 93.5 percent increase from November, but a 34 percent drop from a year ago.

Contact Eve Mitchell at 925-952-2690


BAY AREA FORECLOSURE ACTIVITY FOR YEAR 2010*

HEADERS
Notice of defaults 2010/2009% change
Notice of trustee sale 2010/2009% change
Bank-owned REOs 2010/2009% change
All foreclosure activity 2010/2009% change

CONTENT
Alameda
12,594 -24.1%
11,458 -5.2
6,056 - 0.1
30,108 - 13.4

Contra Costa
12,589 -31.5%
12,076 -14.0
7,196 - 8.0
31,861 - 20.8

San Joaquin
9,537 -37.2%
9,920 -19.0
6,395 -18.4
25,852 -26.7

Solano
6,079 -29.1%
5,727 -12.9
3,443 -17.4
15,249 -21.1

Bay Area
32,794 -25.6%
30,251 -5.1
16,140 - 0.3
79,185 -14.1

* The numbers represent foreclosure filings during the year, even if there were multiple filings against the same property.
Source: www.realtytrac.com