Sunday, September 13, 2009

Bay Area Foreclosure Down... Which is good, right?

Yes, it’s true… For the first time in at least four years! That is good news… or is it?

There are several stages of foreclosure or pre-foreclosure and post-foreclosure. The first stage (which is not reported and we have no public count) is 30/60/90 day late notices to homeowners who miss their mortgage payments. They are typically experiencing some form of distress. They may just lost a job, had a pay decrease, working hours reduced, health issues, a death in the family, or their mortgage may have reset to higher rate, known as an ARM or Adjustable Rate Mortgage. The second stage is what’s called Notice of Default or NOD in California. Other states have Lis Pendens which are public notices of default. The third and final stage of pre-foreclosure is Notice of Trustee Sale or NOT in California. If the default is not cleared prior to the trustee sale, the home is sold at auction and many times is bought back by the bank and becomes a bank owned property or what is referred to as an REO.

Once the home is owned by the bank, it is put on the market for sale as an REO property, usually at a lower price than what it would have sold for in a pre-foreclosure status. This is due to the fact that it is now a vacant property, sometimes having sat unattended for months or longer, the weeds are growing, the grass hasn’t been cut, the carpets are filthy, sometimes the kitchens are gutted and/or the home is in “less-than-ideal” quality and this drives the market prices down…

So, back to the original statement… are the numbers for August looking better? Well, yes it is a good sign that pre-foreclosure or NOD activity is down for August compared to July and Year over Year. However the Notice of Trustee Sales or NOD were UP 86% in Alameda County and UP 47% in Contra Costa County and UP in every Bay Area County (year over year).

What this all means is, we are not out of the woods yet and there will likely be more foreclosures coming on the market in the near future as only and estimated 12-25% of the loans in default (distressed properties) are being able to arrange a loan modification or sell their homes in a Short Sale or in some other way find a solution to clear the default.

For more information or a FREE REPORT, “Options for Homeowners” go to or go to my website

If you or someone you know is facing foreclosure or would just like more information and to hear about the local housing market conditions, come to our FREE Foreclosure Prevention Seminar on September 30th at the Hilton Pleasanton. Register online at or call 925-549-0714.

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