Foreclosures surge in Southern California, but for how long?

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Foreclosures Surge in Southern California, but for how long?

Foreclosures in Southern California hit their highest level in two years in January, according to new data out Thursday. But market-watchers say it’s more a matter of lenders clearing their books than a new wave of bad loans.

The number of homes repossessed by banks in Los Angeles County nearly tripled from December to the highest level since December 2012, according to data firm RealtyTrac. Similar patterns were seen in Orange, Riverside and San Bernardino counties.

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Foreclosure Activity Increases in 32 States

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Foreclosure Activity Increases in 32 States

There were a total of 327,258 U.S. properties with foreclosure filings in the third quarter of 2015, down 5 percent from the previous quarter but up 3 percent from the third quarter of 2014, according to Realty Trac’s recently released Q3 and September 2015 U.S. Foreclosure Market Report.

The annual increase in the third quarter marked the second consecutive quarter where U.S. foreclosure activity increased on a year-over-year basis following 19 consecutive quarters of a total of year-over-year decreases.

Among the nation’s 20 largest metro areas, those posting the biggest decrease in foreclosure activity in the third quarter of 2015 compared to a year ago were Riverside-San Bernardino (in Southern California (down 21 percent), Los Angeles, California, (down 21 percent), San Diego, California (down 20 percent and Miami, Florida (down 16 percent).

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O.C. late mortgage payments drop 21%

According to CoreLogic’s latest late-mortgage report, 5.44% of Orange County home-loan borrowers as of January are 90 days-plus late with their house payments.

This 90-day delinquency number is seen as a key indicator of future mortgages woes as it captures officially troubled borrowers plus patterns of property owners skipping house payments before the formal foreclosure process begins.

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Banks Paying Homeowners to Avoid Foreclosure

Banks, accelerating efforts to move troubled mortgages off their books, are offering as much as $35,000 or more in cash to delinquent homeowners to sell their properties for less than they owe.

Lenders have routinely delayed or blocked such transactions, known as short sales, in which they accept less from a buyer than the seller’s outstanding loan. Now banks have decided the deals are faster and less costly than foreclosures, which have slowed in response to regulatory probes of abusive practices. Banks are nudging potential sellers by pre-approving deals, streamlining the closing process, forgoing their right to pursue unpaid debt and in some cases providing large cash incentives, said Bill Fricke, senior credit officer for Moody’s Investors Service in New York.

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