Foreclosure rate is different here; doesn't fit findings
A house sits vacant Sunday in El Centro. (DENNIS JACOBELLI)
A drop in foreclosures statewide doesn’t necessarily mean Imperial County is out of the basement yet. At least that’s what one local businessman in the real estate business had to say Sunday after a discussion about DataQuick Information Systems’ findings.
The San Diego-based real estate information service known as DataQuick released findings last week stating that “the number of California homes going into foreclosure dropped again during the fourth quarter of 2010 to its lowest level in more than three years.”
The press release states that this is the result of shifting market conditions as well as evolving lender and mortgage servicer policies, though it is unsure how much of each factor contributes to the decline.
According to DataQuick, 69,799 notices of default were recorded statewide during October through December 2010, bringing the foreclosure rate down 16.2 percent from the prior quarter, and 17.5 percent from the fourth quarter of 2009.
California’s 2010 fourth quarter activity was also the lowest in notices of default since the second quarter of 2007, according to DataQuick.
Areas like Imperial County with median house values of $200,000 or less saw fourth-quarter defaults drop 22.2 percent from the prior quarter and 19.5 percent from 2009 but the concentration of defaults remained much higher when compared to areas with median house prices of $800,000 and up.
Still, more than half of homes statewide that received notices of default in the past 18 months have been foreclosed on and sold, according to DataQuick.
“I think the issue is that most people who are in trouble financially in their homes are doing short sales,” said Imperial Valley Real Estate Services President Jon Edney.
Edney explained short sales — or a negotiated situation where the lender agrees to take less money than is owed on the house from the borrower through a broker — are becoming more prominent since short sales take less time to process than traditional foreclosures.
“Ultimately a short sale is a quicker way for the lender to get whatever funds they are going to get out of the house back,” Edney said.
“It’s in many cases easier to do the short sale,” he said. “The lender is likely to save two or three months or more in time than going through the foreclosure process and, of course, that’s what it is, time is money.”
Edney said that lenders generally absorb less of a loss through short sale negotiations, which average 45 to 60 days, rather than waiting through the lengthy four- to six-month average foreclosure process.
He said the loss lenders take is somewhere between 40 percent to 60 percent in Imperial County, while coastal regions are somewhere in the 25 percent to 40 percent range of loss.
Locally about 80 percent of houses listed on the market are either foreclosed homes or short sales, he said.
“It’s going to be a long time for Imperial County to come back to anywhere near those prices,” Edney said.
Staff Writer Roman Flores can be reached at 760-337-3439 or firstname.lastname@example.org
By the numbers
Imperial County foreclosures
Notices of default (the first step in foreclosure process)
503 fourth quarter 2009
376 fourth quarter 2010
25.2 percent reduction
Trustees deeds recorded (these signal that homes were lost to foreclosure)
359 fourth quarter 2009
243 fourth quarter 2010
32.3 percent reduction