Foreclosure Sales Jump by 21 Percent

Despite increase, sales are still well below record levels

Discovery Bay, CA, November 12, 2009 - PropertyRadar (www.foreclosureradar.com), the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for October 2009. After 3 months of consecutive declines, the number of foreclosure sales taken back by banks rose by 22.24 percent from September and 20.95 percent from October 2008. Despite these dramatic increases, the number of foreclosures taken back by banks remains 42.56 percent below the peak reached in July 2008, from which time the inventory of scheduled foreclosures has grown by 131.36 percent." While we continue to see a steady stream of properties entering foreclosure, relatively few are completing the process and being sold at auction despite the increase this month," says Sean O'Toole, Founder, and CEO of ForeclosureRadar.com. "The bigger picture is that more and more homeowners are finding themselves upside down in foreclosure limbo, some hoping for a loan modification or short sale, while others are just waiting for a knock on the door".

Foreclosure Filings

Notice of Default

Prior Month        Prior Year
-7.47%                 103.46%

Notice of Trustee Sale

Prior Month        Prior Year
13.02%                41.74%

Foreclosure filings in October remained relatively flat month-over-month. The significant year-over-year increases are largely explained by CA Senate Bill 1137, which went into effect in September 2008 and temporarily slowed the foreclosure process.

Foreclosure Outcomes

Back to Bank (REO)

Prior Month          Prior Year
22.24%                 20.95%

Cancellations

Prior Month        Prior Year
0.94%                  -22.52%

Sold to 3rd Party

Prior Month      Prior Year
16.42%              381.33%

The number of foreclosures sold at auction to 3rd party bidders, typically investors, continues to grow significantly. Given that this increase in sales to 3rd parties happened in conjunction with a decline in the average discount to the market value received by these investors, it is clear that the sales at the courthouse steps are becoming increasingly competitive. Many auction investors are gaining confidence that they can make money reselling homes purchased on the courthouse steps, given the limited supply of homes available on the MLS and continued demand stimulus in the form of tax credits and low-interest rates. At the same time, acquiring the information required to be a knowledgeable auction investor has become easier to obtain through services like ForeclosureRadar.

Foreclosure Inventories Scheduled for Sale

Prior Month       Prior Year
6.46%                150.37%

Bank Owned (REO)

Prior Month       Prior Year
5.65%                 -35.09%

We continue to see the number of properties scheduled for foreclosure sale increase. Lenders continue to postpone the sales rather than foreclose, with 87 percent of foreclosure postponements being made at the lenders request or with their agreement, compared with just 10 percent that are postponed due to bankruptcy.

Banks increased their Bank Owned (REO) inventory slightly, by taking back 22.24 percent more properties than the proceeding month, while REO resales declined. The decline in REO resales is not unexpected as REO inventories have declined to a point that is insufficient to meet market demand.

Foreclosure Discounting

The discounts received by 3rd party investors at the courthouse steps declined this month to just 17.9 percent below our estimated market value, a change from 20.5 percent last month. We also saw the discount from the outstanding loan balance shrink to 48.5 percent from 50.4 percent in September.

Foreclosure Sales by Loan Origination Date

The majority of loans foreclosed on in October 2009 were originally made between January 2005 and December 2007.

Foreclosure Activity By County

Notice of DefaultNotice of Trustee SaleBack to Bank (REO)Sold to 3rd Party