The number of homes entering foreclosure was at a three-year low in the Bay Area in January, a foreclosure tracking company reported Tuesday.
The drop, as well as the slow pace of actual foreclosure sales, makes it unlikely there will be any surge in foreclosures this year, the company said.
"January's numbers should put to rest any notion that we will see a wave of foreclosures in 2012," said Sean O'Toole, head of ForeclosureRadar, which published the report.
In fact, O'Toole said, "there is little chance of a wave this year even if all the banks started the foreclosure process en masse tomorrow."
Although the numbers were up from a very slow December, the slow progress of banks in foreclosing on defaulting borrowers has helped keep the inventory of homes for sale low. That's made it hard for conventional buyers to find anything and increased already fierce competition among cash-paying investors.
According to the Discovery Bay company, it takes eight months for banks to auction off a house after sending the owner a default notice.
Banks canceled about half the scheduled auctions of homes in January in four Bay Area counties, either because of a short sale of the house -- where the property is sold for less than what was owed on the mortgage, or because of trial loan modifications. Banks also rescheduled some auctions.
Just over 2,200 homeowners in Santa Clara, Contra Costa, Alameda and San Mateo counties received
Nearly 1,500 homes in the four counties were sold in January to third-party investors who paid cash at courthouse auctions, or were taken back by banks after they failed to find a buyer. That was down from about 2,000 a year ago.
One of those foreclosures was Myrian Lonaker's San Jose home. She said her home was unsuccessfully auctioned by Wells Fargo after she spent more than a year trying to work out a loan modification. Her original, interest-only loan was from World Savings, which was taken over by Wachovia, which was taken over by Wells Fargo.
Even though the bank hasn't found a buyer for her home of 34 years, she has to leave it by next Wednesday. "I'm going to hang on, but I don't know how yet," she said.
A representative for Wells Fargo said they would contact Lonaker to see if anything else could be done to help her.
The declining number of foreclosure "starts" -- notices of default -- and the slow pace to bring these homes to auction has reduced the number of homes on the market. That's made finding a home tough for buyers who compete with investors paying cash. Competition also is heating up among investors for foreclosed homes auctioned on courthouse steps, the company reported.
"Seasoned investors say competition is fierce," said Michelle Lenahan of ForeclosureRadar. "We can only speculate that these are people looking to buy and hold because of the rental market that's looking really good," she said.
Another program that should keep more struggling homeowners in their homes was announced last week. Five large banks agreed to a $25 billion settlement with state attorneys general that will provide for refinancings and principal reductions for struggling borrowers who are current on their loan payments.
Contact Pete Carey at 408-920-5419