Report: California Foreclosures Drop 31% In January

February 14, 2009 · Filed Under Economic Impact of Foreclosures, Loss Mitigation, Mortgage Default, Stop Foreclosure, US Foreclosure Statistics 

It appears that some people are getting the promised benefits out of the various stimulus, recovery, and bailout plans that the government has passed in the last year. Though the government of California has been having an immeasurable amount of economic trouble lately, the state’s citizens are getting a small amount of recovery.

There were only 14,351 foreclosures in the state of January in California, as opposed to 20,952 foreclosures the month before. This number of foreclosures was the highest of any state in the entire country, but not the most per capital.

Nationwide, foreclosures are down by more than a quarter between the last two months. Despite these numbers, however, this may not be due only to a moderate recovery in the economy, as Fannie Mae and Freddie Mac both have a moratorium on foreclosures (and they own fifty percent of the United State’s mortgages), which has a big effect, completely separate from the strength of the market.

Furthermore, some commercial banks have agreed to do this as well.

Many banks are allowing consumers to change the terms of their mortgages, which can seriously hurt the banks’ balance sheets, and pumps up these numbers in an artificial way. This process is called Loss Mitigation.

Finally, the California senate has implemented a law recently, which may have had a large effect, that requires any lender to contact a homeowner before they are permitted to begin any type of foreclosure proceedings.

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