The number of Bay Area homeowners who entered the first stage of foreclosure in January spiked by almost 40 percent from a year ago as banks once again gear up the foreclosure machine after hitting the pause button.
January's jump is not related to the robo-signing scandal that broke in September, which led California lenders to temporarily slow down the number of foreclosed homes being taken back by banks, said Daren Blomquist, director of marketing and communications for RealtyTrac.com.
"It may be that lenders are feeling, at least in California, that they can go ahead and push some of these delinquent properties into the foreclosure process that they have delayed" for reasons such as trying to work out a loan modification with the borrower or being overwhelmed with too many properties, he said.
A total of 2,615 home- owners in Alameda, Contra Costa, Marin, San Mateo and San Francisco counties received a notice of default in January, according to a report released Thursday by RealtyTrac.com. That's an 8.3 percent increase from December and a 37.8 percent jump from a year ago.
Lenders send out a notice of default after homeowners have missed several mortgage payments.
Statewide, notices of default sent out in January numbered 24,162, a 0.3 percent decline from a year ago, after 13 straight months of double-digit declines, said Blomquist.
Over the past year, Blomquist said, "we knew there were pretty high delinquency rates in California. Because of that, we're starting to see notices of default jump back up."
On a national basis, however, default notices totaled 75,198 in January, a 27 percent drop from a year ago, and the 12th consecutive month that saw a year-over-year decline.
In Alameda County, 907 notices of default went out in January, a 9.3 percent drop from December, but a 30.1 percent gain from a year ago. In Contra Costa County, 1,138 homeowners received a notice of default, a 30.3 percent increase from December, and 51.3 percent jump from a year ago.
Since December, there has been an influx of homeowners seeking help to avoid foreclosure, said Sheri Powers, manager of the Homeownership Center at the Oakland-based Unity Council.
"We've noticed a new wave of people who are in default," Powers said.
In most cases, those seeking help have received a letter from a lender that is sent out before receiving an official notice of foreclosure, she said.
While notices of default have increased on a year-to-year basis, fewer foreclosed homes have been taken back by banks.
In the Bay Area, 1,364 foreclosed homes were taken back by banks last month, a 21.5 percent increase from December, but a 12.1 percent decline from a year ago. In Alameda County, 489 homes became bank-owned, a 9.9 percent increase from December, but an 18.9 percent drop from a year ago. In Contra Costa County, 637 homes became bank-owned, a 26.1 percent increase from December, but a 5.5 percent drop from a year ago.
The year-to-year slowdown in homes being taken back by banks should start to reverse itself now that banks have gotten past the robo-signing delays, said Kevin Kieffer, a Realtor with Keller Williams Realty in Danville.
It will be easier for banks to move homes that have been in the process of foreclosure to the notice-of-trustee sale stage. That middle stage allows a home to be sold at an auction to a third party or taken back by the bank.
Still, Kieffer said he expects that some banks will be more willing to work out a short sale with a homeowner as an alternative to foreclosure than they have in previous years. A short sale is when a home is sold for less than the amount owed.
"I see the short sales are getting a real good traction. I think it's going to swing more toward short sales and negotiated sales as opposed to the notice-of-trustee sales route," Kieffer said.
Contact Eve Mitchell at 925-952-2690.
Notice of defaults yr/yr Jan. % change
Notice of trustee sale yr/yr Jan.% change
Bank-owned properties yr/yr Jan. % change
All foreclosure activity yr/yr Jan.% change