New California Law Impacting National Foreclosures
With the California Homeowner Bill of Rights taking effect at the beginning of 2013, it didn’t take long to see the legislation’s impact on the default foreclosure process.
U.S. foreclosure activity decreased 7% in January from the previous month to its lowest level in approximately six years, according to RealtyTrac. Overall, 150,864 default notices, scheduled auctions and bank repossessions were reported in January, which is also down 28% on an annual basis.
The Irvine, Calif.-based real estate data firm’s report revealed that one in every 869 properties had a foreclosure filing during the month.
Specifically, California was a major reason for the monthly downfall as the Golden State experienced a 62% month-over-month drop in default notices—the lowest level since October 2005—due in large part to the new law.
The Homeowners Bill of Rights prohibits dual-tracking and requires borrowers who are at risk of foreclosure the opportunity to have a single point of contact during the loss mitigation process. In addition, the new law imposes fines of up to $7,500 per loan for filing of multiple unverified foreclosure documents.
“The foreclosure landscape in January was profoundly altered by the effects of new legislation that took effect in California on the first of the year,” said Daren Blomquist, vice president at RealtyTrac.
“As a result, the downward foreclosure trend in California accelerated into hyper speed in January, decisively shifting the balance of power when it comes to the nation’s foreclosure activity.”
Across the country, foreclosure starts were down 11% from December and 28% from a year ago, RealtyTrac said, which represents a 79-month low.
Conversely, some of the biggest yearly increases in foreclosure starts came in nonjudicial states where legislation stalled foreclosure actions last year, such as Arkansas which was up 539%, Washington saw a 179% increase and Nevada rose 87%.
Other highlights from the January report was that scheduled foreclosure auctions increased in 26 states, hitting 12-month highs in several judicial states including Florida, Illinois, Pennsylvania and New Jersey. Also, bank repossessions decreased 5% month-over-month and were down 24% from January 2012.
Florida posted the nation’s highest state foreclosure rate for the fifth consecutive month, in which one in every 300 housing units had a foreclosure filing. This is more than twice the national average. A total of 29,800 Florida properties had a foreclosure filing in January, 12% more than December.