The Breakdown

Explaining Southern California's economy

Why California saw fewer foreclosures than other states in 2012

43195 full
43195 full

The housing crisis was also a foreclosure crisis, and many homeowners in California lost their homes. But the situation in the state improved in 2012.

One reason for this is that California is a so-called non-judicial state; i.e., it does not require that foreclosures be overseen by the courts. That allows foreclosures to be completed more quickly. And that is why  judicial states -- those that require court oversight of foreclosures, such as Florida -- surpassed California and other non-judicial states in the number of foreclosures.

That prompted Irvine-based real estate analysis firm RealtyTrac to report on Wednesday that 2012 was the “year of the judicial foreclosure.”

I wrote about this last year:

The process is streamlined [in California], 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.

The robosigning scandal is in the rear-view mirror for the state, but that doesn't mean some California cities aren’t still reeling from the foreclosure crisis. Bankrupt Stockton, for example had the highest rate in the nation in 2012: one in every 25 homes had a foreclosure filing.

However, Stockton also saw a 25 percent drop in foreclosures from 2011 to 2012, as did six other California cities in RealtyTrac’s foreclosure top 20 for the year, including Stockton's cousin in bankruptcy, San Bernardino. That's the good news mixed in with the bad — and evidence that California suffered mightily through the housing downturn.

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

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