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Home prices, new laws help bring down San Diego's foreclosures

San Diego County’s foreclosures have mostly stabilized with the help of increasing home prices and the Homeowner Bill of Rights, according to a local expert.

Home prices have brought some underwater borrowers into positive equity, and the Homeowner Bill of Rights, a state law that went into effect on Jan. 1, made it easier for borrowers to modify their loans, said Joe Bertocchini, director of residential real estate for the Burnham-Moores Center for Real Estate at the University of San Diego.

“We’ve seen home prices go up substantially, which puts people underwater and struggling in a positive equity position, and get beyond a place where they were struggling to get ahead of the game,” Bertocchini said.

Trustee deeds -- the final step in the foreclosure process, transferring ownership from the delinquent borrower back to the lender or to a third party -- were filed on 174 properties in August, 14.29 percent fewer than in July and 71.38 percent fewer than August 2012, according to the San Diego County Assessor's Office.

Notices of default (NOD) -- which initiate the foreclosure process by registering that a borrower is behind in payments -- decreased 7.54 percent from July to August, and fell 55.71 percent from August 2012 to August 2013.

Lenders issued NODs to 601 borrowers in August, down from 650 in July and down from 1,357 in August 2012.

Bertocchini said there has likely been a substantial increase in the percentage of people able to get through the loan modification process last year versus this year.

Gov. Jerry Brown signed the Homeowner Bill of Rights into law to help ensure fair lending and borrowing practices. The law pertains to first trust deeds secured by owner-occupied properties with one to four residential units, according to the California Association of Realtors. As part of the law, homeowners are guaranteed a single point of contact with a person or team at a bank familiar with their case.

Bertocchini said there’s also not enough housing supply available to address the pent-up demand, which has driven prices up and allowed homeowners to avoid foreclosure. The median price of a single-family detached home in San Diego County was $483,000 in August, up 23 percent from August 2012, according to the Greater San Diego Association of Realtors.

He said he expects the number of foreclosures and NODs to stay fairly steady with some slight fluctuations.

“Some driving factors could cause more notices of default or foreclosures. NODs -- obviously the jobs numbers could change that. I don’t see anything changing these numbers dramatically for the short term,” Bertocchini said.

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