Month of May sees fewer Default Notices in Bay Area – effect of Short Sales?
As we know, Default Notices are the first bell of alarm sounded by the lenders to their borrowers, staying behind mortgage repayments. The foreclosure laws of all States stipulate that a legal notice, appropriately worded and giving full details is to be first sent to the home loan borrower in case the monthly repayment commitment is not met – consecutively for at least 3 months. This is to give an opportunity to the other side, to make good the lapsed installments and bring the mortgage to current.
The issuance of a Default Notice commences the foreclosure process. In the present foreclosure scenario, the numbers of Default Notices issued are taken as the barometer, to assess the foreclosure activity in a certain region – by its increase or decrease. Eventually it gives a wider meaning for industry analysts to interpret into more analytical predictions.
This way, the statistics released by Realtytrac for the month of May reveals that the number of Default Notices fell by about half in the East Bay, during May 2010, from a year ago, since more distressed homeowners opted for Short Sales.
Industry observers are of the view that the slowdown in Default Notices that began this year are tied to home loan borrowers facing foreclosure process, getting into trial loan modification programs.
According to Daren Blomquist, marketing and communications manager of Realtytrac, which released its latest foreclosure activity report, while defaults are down, the number of previously foreclosed homes being taken by banks is on the rise; lenders continue to work through a backlog of delayed home repossessions, including many that failed to get permanent loan modifications.
Blomquist commented that it is a tale of two different trends with the foreclosure process; it’s kind of good news and bad news.
The concept of Short Sale is selling a distressed home for a price less than the mortgage amount, which requires the approval and consent of the lender. The fact that the number of Default Notices are declining is an indication that more number of troubled home owners are opting for Short Sale route and thereby escape from the foreclosure process.
Posted by Amitesh Kumar
on Jun 18 2010. Filed under Foreclosures, Short Sales.
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