San Diego Real Estate Professionals at eXp Realty

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Continuing on a positive note, news of a decline in the number of San Diego home mortgage defaults came as a surprise to many of the more downbeat observers of the San Diego real estate market.  In April 2009 the number of home mortgage defaults in San Diego County dropped 12 percent from the March 2009 figure.  And although the number of Notices of Default are not directly correlated to the number of home foreclosures, this could be further evidence that San Diego home foreclosures have reached their crest.

Notices of default (NOD’s) are usually issued about 60 days after a home owner misses a mortgage payment. During that time, the majority of home owners attempt to negotiate with their lender for a mortgage modification.  Most lenders currently have loan modification programs available to assist home owners in financial distress.  Thousands of owners of San Diego homes are taking advantage of these loan modification programs to bring their mortgage payments back down to levels that they can afford.

If the lender and the home owner settle on a loan modification agreement, the NOD is rescinded and the home owner again begins to make their mortgage payments on a regular schedule.  But if a lender refuses to modify the home loan, or if the home owner and the lender cannot agree upon loan modification terms, then the next step in the process is a Notice of Trustee Sale.

There is a minimum of 90 days (often longer) between the NOD and the Notice of Trustee Sale.  During this 90-plus days the delinquent home owner is given the opportunity to catch up on past-due payments, and the bank and the home owner usually continue their effort to negotiate a loan modification agreement.   If a Notice of Trustee Sale is issued, there is a minimum of 21 days (often longer) before the Trustee Sale actually takes place.

At the Trustee Sale the bank takes title to the property.  The property then becomes Real Estate Owned (REO), otherwise known as a “bank-owned foreclosure property”.

From here the banks work as quickly as they can (usually about 3 months) to clean out the REO property and prepare the home for sale. The banks market the foreclosure properties for sale through San Diego Realtors who list the properties on the San Diego MLS.  The foreclosure properties are listed at discounted prices to attract as many bids as possible in the shortest amount of time.

In April there were 903 foreclosures in San Diego County.  This is down 36 percent from April 2008.  This decline is partially due a recent foreclosure moratorium, but is also a sign that loan modification programs may be working to minimize the number of San Diego foreclosures.  The decline of the number of Notices of Default combined with the success of the loan modification programs is good news for San Diego home owners.

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