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Dataquick just came out with its third quarter numbers, which like RealtyTrac, show a drop in notices of default, the first step in the foreclosure process. The explanation seems to be the state's new law that requires lenders to contact delinquent borrowers at least 30 days prior to a notice of default (homeowners receive a notice of default after not making payments for at least 60 days). Dataquick says that without the law, which went into effect in early September, the pace of default filings would have been about the same as in the previous three months. L.A. County had 17,073 notices of default in the July-September quarter, a 25.7 percent jump from a year earlier. From Dataquick's press release:
"What’s interesting is that the surge in activity certainly did level off during the second and third quarters. A lot of the market’s distress is working its way through the system and the spectacular jumps in activity may be behind us. Or it may be that those processing the default paperwork are just maxed out,” said John Walsh, DataQuick president.
Not surprisingly, most of the loans that went into default last quarter were originated between October 2005 and February 2007. That's when lending standards went kablooey because there was more emphasis on the number of loans being churned out rather than their quality.
NOTICES OF DEFAULT (first step in foreclosure process)
County/Region 2007Q3 2008Q3 Yr/Yr%
Los Angeles 13,583 17,073 25.7%
Orange 3,882 5,692 46.6%
San Diego 5,673 7,062 24.5%
Riverside 9,250 11,714 26.6%
San Bernardino 7,038 9,110 29.4%
Ventura 1,377 1,676 21.7%
Imperial 259 568 119.3%
San Francisco 252 353 40.1%
Alameda 2,126 3,482 63.8%
Contra Costa 3,216 4,103 27.6%
Santa Clara 1,655 2,814 70.0%
San Mateo 581 797 37.2%
Marin 172 258 50.0%
Source: MDA Dataquick
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.