Explaining Southern California's economy

Foreclosures continue to decline in California in May

Stop Foreclosures!

Corey Bridwell/KPCC

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.


California and Nevada team up to make the housing crisis last forever

The Attorneys General of California and Nevada, Kamala Harris and Catherine Masto, have joined forces to pursue the banks that were involved in the foreclosure crisis to the ends of the earth. This is crusading stuff. But will it actually help? The LA Times sums it up:

The new alliance between Harris and Masto comes as the largest banks are working to strike a deal with a coalition of attorneys general and federal agencies that is led by Iowa Atty. Gen. Thomas Miller, who has forced the mortgage industry to accept large settlements in the past.

Masto has said the state would evaluate any proposed deal but would push ahead with her own work. New York, Delaware, Kentucky and Minnesota have signaled they are unhappy with the direction of the talks with the banks. New York and Delaware have struck their own agreement to pursue a wider probe of Wall Street's role in the mortgage meltdown.

The negotiations were expected to have produced a settlement of as much as $25 billion for the states, including a provision that would write down principal for troubled borrowers, a move long pushed for by housing advocates. But despite pressure from the Obama administration for a quick settlement that might give the beleaguered housing market a boost, those talks have dragged on for more than a year.