The term real-estate owned (or REO) is taking on new meaning in California, where REO properties recently accounted for 34-percent of the state's home sales in April, according to a new report from ForeclosureRadar—a company that tracks all foreclosure data in the Western state.
ForeclosureRadar says the data collected in April hints at what lies ahead, and it's not necessarily good news.
In April alone, California set a new record when 44,101 new notices of default were filed. In addition, Notices of Trustee Sale increased 7.8-percent to 29,892, dwarfing the previous record. The number of foreclosures sold in California auctions (22,838) also increased 44-percent when compared to March.
“We expected a significant increase in auction sales based on previous default patterns,” said Sean O'Toole, founder of ForeclosureRadar. “Unfortunately, the continued increases in defaults tell us that the worst is still ahead. It is time for lenders to accept this reality, and start approving short sales rather than forcing more than two-thirds of troubled homeowners through the entire foreclosure process.”
ForeclosureRadar also painted a somewhat bleak picture for lenders, saying they “added 22,324 properties to their 'real estate owned' inventory last month." “Based on these levels, lenders are increasing REO inventories 1.36-times faster than they are able to resell them,” ForeclosureRadar said.
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