Feared flood of foreclosures in California may be averted
Signs are emerging that a much-feared escalation of California home foreclosures may not happen, as banks respond to government pressure and scale back their repossessions of troubled properties.
Statewide, the number of homes taken back by lenders dropped sharply in the three months ended Sept. 30, falling 37% over the same period a year earlier, when foreclosures were at an all-time high.
If the trend continues, it will give momentum to the fledgling recovery in the housing market. Although home prices appear to have bottomed out in much of the state, industry analysts have cautioned that a glut of foreclosed properties coming on the market could send values plunging again.
“I certainly don’t think there’s going to be a deluge, or second wave of foreclosures,” said UC Berkeley economist Kenneth Rosen, who believes federal officials will do whatever it takes to see the backlog of foreclosures clear gradually. “There’s now an appetite to make sure we get this right.”