Foreclosure starts and notices of homes scheduled for auctions plunged in Orange County and California in January, as new state laws kicked in restricting the way banks can repossess properties.
In Orange County, notices of default, the first step in the foreclosure process, dropped 57 percent from December and 77 percent year over year, while notices of trustee sales, or auctions, declined 41 percent from January and 65 percent year over year, data from ForeclosureRadar.com shows.
The Homeowners Bill of Rights, championed by California Attorney General Kamala Harris, includes a restriction on "dual tracking" ? when a lender forecloses on a home while the struggling owner is in the midst of seeking a loan modification or other type of assistance.
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Statewide, default notices plummeted 61 percent from December and 78 percent year over year, and auction notices fell 35 percent from December and 66 percent year over year, the data showed.
Lenders filed 4,500 notices of default statewide in January, the lowest levels since ForeclosureRadar.com started tracked the data in September 2006. That number sharply contrasts with 20,141 notices filed in January 2012.
"While there are many forces conspiring to slow the number of foreclosures, the big drop in January appears to be a result of the California Homeowner Bill of Rights, which took affect January 1, 2013," said Sean O'Toole, CEO and founder of ForeclosureRadar.com.
But, he said, "Like most laws to date, this one does delay the foreclosure process, but does little to help homeowners with the real problem, negative equity."
The Homeowners Bill of Rights, championed by California Attorney General Kamala Harris, includes a restriction on "dual tracking" ? when a lender forecloses on a home while the struggling owner is in the midst of seeking a loan modification or other type of assistance.
The law also says homeowners must be provided with a single point of contact as they navigate the system and try to keep their homes, and that banks must verify mortgage documents before a foreclosure.
New consumer protections also were created on the national front. In February 2012, 49 state attorneys general reached a $25 billion settlement in a lawsuit accusing the nation's major lenders of abusive mortgage servicing and foreclosure practices. As part of the settlement, lenders agreed to restrict dual tracking. The restriction took effect in October.
The $25 billion national mortgage settlement is the largest consumer financial protection settlement in U.S. history. The settlement also requires the banks to regularly report how they are complying with the agreement, which was approved by a federal judge and is akin to a court order.
In January, federal regulators announced that 10 big U.S. banks and mortgage companies agreed to pay $8.5 billion to settle complaints that they improperly foreclosed on some homeowners.
About 11 million homeowners in the U.S. have negative equity, owing more on their mortgages than the properties are worth.
In the third quarter of 2012, 96,706 Orange County homeowners had negative equity, Irvine-based data firm CoreLogic reported. That was 15,574 fewer than the number that were under water at the start of the year, due to rising home prices.
Underwater homeowners' choices include continuing to pay the mortgage, negotiating a loan modification, selling at a loss, or going through a foreclosure or short sale for less than the amount owed on the loan.
Contact the writer: mkalfus@ocregister.com
Source: http://www.ocregister.com/articles/year-495859-percent-homeowners.html
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