Occupy LA supporters hold up a "Stop Foreclosures!" sign outside of the BNY Mellon Bank. The pace of foreclosures has actually been falling in California for the first half of 2012.
California is continuing a trend from the first quarter of 2012, as foreclosure rates fall year-over-year in cities throughout the state. For example, in the first quarter, foreclosure filings fell 24 percent in Los Angeles, according to RealtyTrac, a company that specializes in foreclosure data. In May, that figure was replicated: a 24-percent drop for the month, on more than 10,000 notices of foreclosure that were sent out in the city.
Why has the state's foreclosure rate been falling when the pace of foreclosures nationally picks up?
The state hasn't seen the same foreclosure backlog as much of the rest of the country. This is because California is considered a "non-judicial" foreclosure state. The process is streamlined here, to avoid a lawsuit.
Ironically, this is supposed to make things easier on the homeowner, but the robosigning scandal that put the brakes on foreclosures by banks was largely confined to states where the foreclosure process is judicial. Borrowers who could seek legal recourse were a bigger problem than borrowers who couldn't, at least not as easily.
An additional irony here is that California Attorney General Kamala Harris led the charge for the $25-million national mortgage settlement between the states and the big banks that was announced in February.
According to RealtyTrac, foreclosures in judicial states increased 26 percent year-over-year in May, while they declined 20 percent in non-judicial states.
Even though California is moving against the national wave of foreclosures, we still have more than our fair share, with the fourth highest rate in the U.S., as KPCC's Danielle Karson reported on the radio today (see below, and listen at left).
Who's number one? You might reflexively say "Nevada," given that the state led in foreclosures for a staggering 62 straight weeks until March, when Arizona snuck in to take the top spot — for a month, before Nevada retook it in April. But in May, Georgia became number one, with one in every 300 homes under foreclosure.
From Danielle Karson:
The once-frozen foreclosure pipeline is slowly starting to thaw. Sloppy paperwork in 2010 slowed foreclosure filings to a trickle, creating huge backlogs. In May, they went up in 33 states, but fell 19-percent in California compared to a year ago. In the city of L.A., more than 10-thousand homeowners got slapped with a foreclosure notice last month—a 24-percent drop. RealtyTrac’s Darren Bloomquist says the Golden State wasn’t as affected by the robo-signing scandal.
"We didn't see the big delays in processing foreclosures in California and Los Angeles; those markets have already dealt with the worst of the problem, as opposed to delaying foreclosures and kicking the can down the road."
Bloomquist says processing foreclosures takes less time in California. Still, the state has the fourth-highest foreclosure rate in the country: one in every 324 homeowners filed for foreclosure last month.