Banks auctioned off fewer foreclosed Bay Area homes in November as the holiday season began, a foreclosure tracking company reported Tuesday.

The decline, which followed an increase in October, comes as five major banks turn from foreclosing on those behind on their mortgages to loan modifications and short sales under a national settlement with state attorneys general that took effect in October.

So far, there appear to be more short sales than foreclosures, according to Bay Area housing counselors.

ForeclosureRadar reported that cancellations of foreclosure sales were up in November from the previous month although not as sharply as in October. There were 1,916 cancellations of foreclosure sales and only 582 sales in Contra Costa, Alameda, San Mateo and Santa Clara counties. That was down from 744 foreclosure sales in October.

Notices of default -- the first step in the foreclosure process -- were down in the East Bay and Silicon Valley, according to ForeclosureRadar. In Contra Costa County, default notices were down 21 percent from October. They dropped 34 percent in Alameda County and almost 19 percent in Santa Clara County. San Mateo County bucked the trend with an increase of 57 percent from October, breaking a six-month decline.

The number of homes owned by banks dropped again on both sides of the bay, continuing a yearlong trend.

Nonprofits that counsel people facing foreclosure say they haven't seen that many modifications, according to Kevin Stein of the California Reinvestment Coalition, which monitors the groups.

At a recent meeting between the national settlement monitor and foreclosure counselors in Oakland, Stein recalled, "all the counselors were saying things haven't changed very much. Some people were saying things are a little bit better, and nobody said it's worse. Here and there they see modifications," Stein said.

The drop in foreclosure sales is affecting the cases seen by the Housing Trust of Santa Clara County's foreclosure help center, according to program manager Sean Coffey.

"We're seeing more traditional causes of foreclosure -- a spouse passed away, unemployment, divorce or medical bills," he said.

Mary Lu Gonzales, a San Jose real estate agent who volunteers at the help center, said she's seen a decline in people facing foreclosure and more requests from people teetering on having to do a short sale, which is the sale of a home for less than the amount owed on it.

"I'm seeing homeowners who are on the brink, slightly underwater but not enough that a short sale is really worth it for them," she said. They can't get a loan modification, and they can hang on if they tighten their belts, she said, but a short sale is a move they are considering.

"Do they want to take that chance and damage their credit, or hold on for appreciation?" is the question they're asking, she said.

Contact Pete Carey at 408-920-5419. Follow him on Twitter.com/petecarey.