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East Bay foreclosure activity decreased across the board in July compared with a year ago, a sign of improvement in the region's real estate market.

Last month, the number of homeowners who received a notice of default -- the first step in the foreclosure process -- dropped sharply in Contra Costa County, while Alameda County saw a smaller decline, according to a report to be released today by RealtyTrac.com. Both counties also saw a decline in banks taking back properties, the last step in the foreclosure process.

"We are seeing a bit of a seesaw or roller coaster ride here with the numbers, and I think it's because of all the outside intervention that's impacting the foreclosure process," said Daren Blomquist, marketing and communications manager for RealtyTrac. "Even though there are a lot of good signs, it's really too early to say we are totally out of the woods in the foreclosure crisis."

Indeed, the foreclosure story continues to be one of mixed signals. Unemployment, loan-modification programs and the way banks manage their foreclosure backlogs all play roles as to what has happened and what will happen, observers say.

For instance, on a month-to-month basis, Alameda County saw a 143.6 percent increase in notice of defaults from June to July. Chalk that up to unemployment, said Karen Senzig, co-owner of Montclair Mortgage.

"That is impacting a lot of people," she said. "A lot of people who have been in jobs for years and years and years have gone to unemployment. I think as long as unemployment is high, you are going to see a strain on the housing market."

Year-over-year numbers provide a better gauge of the foreclosure environment than month-to-month numbers, said Karen Mayfield, senior vice president for San Francisco-based Bank of the West's mortgage division.

"We're seeing improvement," she said.

Some 896 homeowners in Contra Costa County received a notice of default in July, a 53.8 percent drop from a year ago, and a 15.9 percent decline from June. Another 636 foreclosed homes in July became bank-owned, a 17 percent drop from a year ago, but a 10.4 percent gain form June.

In Alameda County, 1,790 homeowners received a default notice in July, an 8.3 percent drop from a year ago, but up 143.6 percent from June. Another 616 foreclosed homes became bank-owned, a 10.9 percent drop from a year ago, but a 60 percent increase from June.

In the Bay Area -- which RealtyTrac.com defines as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties -- 3,149 homeowners received a default notice, down 35.1 percent from a year ago, but up 26.3 percent from June. Another 1,467 foreclosed homes became bank-owned, down 11.5 percent from a year ago, but up 18.8 percent form June.

The year-to-year drop in default notices is being driven by more short sales -- when a home is sold for less than the loan amount -- and banks' decisions not to proceed with some foreclosure proceedings, Mayfield said.

"I think certain markets have stabilized. In some cases we even have price increases, and we are going to see less homeowners underwater," she said.

Unemployment will continue to affect foreclosures in the coming months, but other factors will also be in play.

"Unemployment is the big unknown," Mayfield said. "Regardless of unemployment, I think that we can see some improvement in home values and (continuation of low interest rates) so that the housing market continues to recover."

Contact Eve Mitchell at 925-952-2690.

By the numbers
Foreclosure activity in the region, July 2009 to July 2010, by county:

Notice of defaults, percent change
Notice of trustee sales, percent change
Bank-owned REOs, percent change
All foreclosure activity, percent change

Alameda
1,790 -8.3%
923 -29.3%
616 -10.9%
3,329 -15.7%

Contra Costa
896 -53.8%
923 -35.3%
636 -17.0%
2,455 -40.6%

San Joaquin
743 -53.9%
725 -42.4%
522 -32.2%
1,990 -45.3%

Solano
408 -51.8%
429 -21.7%
271 -33.6%
1,108 -38.5%

Bay Area*
3,149 -35.1%
2,325 -29.9%
1,467 -11.5%
6,941 -29.4%
*San Joaquin and Solano counties' numbers are not reflected in Bay Area totals.
Source: RealtyTrac.com

Year-to-year change in all
foreclosure activity in Bay Area
-29.4%
Find a full chart on Page A9