Both major measures of foreclosure activity fell in January, according to the San Diego County Assessor’s Office.
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 in January on 780 properties, 12.26 percent fewer than in December and 25.99 percent less than January 2011.
Notices of default (NOD), which initiate the foreclosure process by registering that a borrower is in arrears of payment, fell 3.47 percent from December to January, and 24.82 percent from January 2011 to January 2012.
Lenders issued NODs to 1,530 borrowers in January, down from 1,585 in December and 2,035 in January 2011.
While the declines in notices are a “hopeful indicator” for 2012, the recovery is going to be a slow process, said Mark Riedy, executive director for the Burnham-Moores Center for Real Estate at the University of San Diego.
“I think lenders have been tough enough on borrowers. They’re working their way through problem loans and will continue to do so,” Riedy said. “People I talk to in residential real estate are not optimistic for 2012 -- but they expect it to be less of a bad year than last year.”
He said he expects notices of default to continue to decline year after year and the major issue driving foreclosure rates is job growth.
“We need to create more jobs before we see a healthier market,” Riedy said. “People can’t pay a portion of their loan because people are out of work or underemployed.”
Bringing home prices back up will help to bring down foreclosure rates, Riedy said, but that is also dependent on economic recovery and the job market.
Alan Gin, professor of economics at the University of San Diego, said he thinks the declines in foreclosures and notices of defaults are a good indicator for 2012.
“I think the economy will add some jobs in 2012 and that will help people make payments,” Gin said. “Allowing the people to refinance at the low rates we have today would be helpful ... The president proposed programs that would make it easier for people to qualify -- something along those lines would be helpful.”
Gin was referring to the Obama administration’s proposal for a mortgage refinance program, which would allow underwater borrowers not owned by Fannie Mae and Freddie Mac to refinance their loans at low rates. Currently, the Home Affordable Refinance Program only applies to mortgages backed by Fannie Mae and Freddie Mac.