I’ve noticed that most new listings are “Standard Sale” listings now – not short sales or REO (bank owned) listings . As a matter of fact, seeing a new short sale listing today is sort of “quaint” – reminiscent of the “bad ol’ days” of the previous few years.

So I was curious to compare how many Notice of Trustee Sale notices were published for the county in July compared to a year ago – and it’s been cut in half.

July saw 153 recorded notices compared to over 300 last summer, but down substantially from over 500 in January, 2012.

Relatively speaking, very few foreclosures today are actually going to sale. The vast majority get postponed or cancelled as homeowners work things out with their lender.

This net effect has substantially reduced the number of homes for sale, which in turn shows how the supply and demand nature of things work in a free market.  But in the long term, it’s not a bad thing. As price points have climbed, many underwater homeowners have now found they have equity again and can plan accordingly. We’re also seeing the move-up market starting up again.

Hopefully, the painful challenges we’ve gone through over the past 5 years or so are now in the rear view mirror.

Late Tuesday night, Congress reached a settlement in the “fiscal cliff” negotiations.  As a result, the Mortgage Forgiveness Debt Relief Act has been extended for another year.  The measure will continue to exempt from taxation mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale, loan modification (including any principal reduction), or foreclosure.

Foreclosure statistics for month of September continue to show a downward trend for initial filings of foreclosure, but an upward tick for filings in the Notice of Trustee filings, whereby a time and date is set for the actual auction. However, many properties currently in foreclosure are now being delayed (loan mods) or cancelled (completed short sale or possible HARP refinancing).

Foreclosure stats for 3rd Quarter also show a downward trend. Many think the big lenders are waiting to see what the results of the election will be, how the new congress will be re-constituted and the effect the national mortgage settlement will have, plus the new California foreclosure rules going into effect January 1.

Glancing through this morning’s Wall Street Journal, a major article with a sub-title ‘Boomerang’ Home Seekers Become Eligible for Mortgages and Hit Market Again, caught my attention.

I’ve known that if a homeowner does a short sale, and keeps all their other finances current, they could qualify for new financing in as little as 2 – 3 years. But even those who had their home foreclosed, the FHA is willing to consider providing the guarantee necessary for financing that new loan.

The WSJ quotes the president of the mortgage arm of the large home builder Hovnanian as saying “The industry is saying, ‘Pay your dues and then get back into the market'”. This photo is from the WSJ article and references the Martinez family who lost their CA home in foreclosure in 2007 but just closed escrow on their new home.

Leslie and I personally haven’t worked with a buyer from that situation yet, but for all our prior short sellers, we encourage them with that future goal!

There’s no doubt we’re seeing a slow down in foreclosures. New Notice of Default filings for both July and August were down and Notice of Trustee Sales (auction date set) were also down.

But once an auction was set, the trend was to see more of those properties actually go to sale.

Click here to see the July and August foreclosure stats graph.  This data provided with permission from Ventura County’s Foreclosure List Service.