There were 1,144 trustee’s deeds filed last month, nearly 50 percent down from the year’s peak in July.
Trustee’s deeds are also called notice of trustee’s sale and are the last step before a home is foreclosed on.
Mark Reidy, executive director of the Burnham-Moores Center for Real Estate at the University of San Diego, said the 11.5 percent month-over-month drop in trustee’s deeds is not indicative of market improvement.
“I don’t think things are getting better (overall),” said Reidy. “The only thing I think is getting better is that lenders are trying furiously to work things out.”
Reidy said banks might be trying to encourage short sales since lenders do not have to file a notice of trustee’s sale 90 days after giving a homeowner a notice of default.
The 90-day period is the minimum time a bank can give a homeowner a notice of trustee’s sale after filing a notice of default. It is not mandatory a bank files a notice of trustee’s sale immediately.
Lori Staehling, president-elect of the San Diego Association of Realtors and on the mayor of San Diego’s foreclosure advisory board, agreed that banks are trying to help some troubled homeowners.
“I’m not sure they’re encouraging short sales, but they are working on them better,” she said.
Banks used to take four to six months to close a short sale, oftentimes not fast enough for potential buyers and sellers to go through with their offers. However, banks have started working more quickly with short sales, said Staeling.
Staehling said approximately half of the homes sold in the market are either bank-owned or a short sale.
She said it would make sense for banks to prefer a short sale to allowing a home to go into foreclosure since banks lose money in a home the longer the mortgage goes unpaid or it sits unoccupied.
The increase in notices of default could be partially attributed to a backlog of notices that were stopped from being sent with a change to the California civil code in September.