According to San Diego based real estate analytics company, DataQuick, the number of California homes that are going into foreclosure have dropped in the fourth quarter for 2011.  This is the second lowest level in more than four years for foreclosures!

This seems to be a result of evolving lender and mortgage servicer strategies along with varying market conditions.  Last quarter, the quantity of Notices of Defaults filed last quarter was down 13.7 percent from the third quarter of 2011 and in comparison to 2010’s fourth quarter was down 11.9 percent.  If you were wondering, a Notice of Default is a publicly recorded document indicating the first step in the process for foreclosures.

“We are certainly seeing a lower level of foreclosures than a year or two ago,” said John Walsh, DataQuick president. “The question is, how much of that decline is due to market conditions, and how much is due to policy changes that try to address economic distress and lower home values.”

“Five years ago, almost all mortgage payment delinquencies would have triggered a default notice after a certain amount of time. Strategies now include short sales, refinances, interest rate changes, principal reduction as well as just plain waiting longer. It will be interesting to see how this plays out as the economy improves and the housing market finds its footing,” Walsh said.

We have seen a trend of lenders waiting longer to file a Notice of Default.  In California, homeowners were on average nine months behind on their payments until the lender filed a Notice of Default.  Consequently, from the time a borrower first defaulted, it could take over a year until the lender would actually foreclose.