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Foreclosures plummet to three-year low in November

Foreclosures reached their lowest point since November 2007 and initial defaults the second-lowest total of the year last month, according to numbers provided by the San Diego County Assessor’s office.

“It ain't perfect, but it’s a hell of a lot better than it’s been,” said Alan Nevin, director of research at MarketPointe Realty Advisors.

It’s possible the low monthly total has less to do with renewed strength in the housing market, and more to do with banks reacting revelations that employees signed off on thousands of foreclosures without adequate review.

“I think it’s a combination of things, including possibly seasonality with the holidays as well,” said Alan Gin, professor of economics at the University of San Diego.

There were 787 trustee deeds, the last step in the foreclosure process, filed with the assessor’s office in November.

That’s a 28 percent decline from October’s 1,104, and 34 percent fewer than the 1,193 filed in the year-ago month.

“It’s not showing a real slowdown in foreclosures. That’s not what it’s showing. The market hasn’t shifted there yet,” said Lou Galuppo, residential real estate director at the Burnham Moores Center for Real Estate, attributing the drastic drop to changes in procedure on the parts of banks.

“But that will change in 2011, because the banking community needs to catch back up,” he said.

He added that the county might consistently see these comparatively low numbers by the end of next year.

Notices of default (NODs) -- the first step in the foreclosure process, documenting a borrower is in arrears of payment -- fell from 1,909 in October to 1,832 last month.

Down 22 percent on a year-over-year basis, NODs in November reached their second-lowest total of the year, behind only the 1,798 filed in May.

“The (NODs) might be an actual indication of the direction of where things are going in 2011,” said Galuppo.

The low foreclosures and NODs show the market is running out of bad mortgages originating between 2003 and 2006, Nevin said.

He doubts that November’s numbers are primarily due to the so-called robo-signing scandal, and says the industry should count this as “fabulous” news.

“It sort of means we’re coming to the end of the road in terms of great buys,” he said.

Gin added that year-over-year improvements in home values have diminished incentive for homeowners to strategically default.

Despite falling by 1 percent in the year’s third quarter, San Diego home values have appreciated 5 percent over a year ago, according to the S&P Case-Shiller Home Indices, released earlier this week.

“The housing market is in better shape than a year ago,” Gin said. “That played a big role. Unless there’s a double dip, and prices start going down again, there won’t be another major increase in foreclosures.”

Through 11 months, 12,638 homes have been foreclosed in San Diego, while 23,002 homeowners have defaulted on their mortgages.

Those numbers are down 10 percent and 36.5 percent, respectively, over the year-ago totals.

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