Foreclosures jumped in July in Santa Clara and San Mateo counties, mirroring a statewide trend, but the number was down from a year ago, according to a report released Thursday.
Santa Clara County had 363 foreclosures, a 20 percent increase over June, but 12 percent below July 2009. San Mateo County's 117 foreclosures were up 17 percent from June but 13 percent below last year, according to ForeclosureRadar, the Discovery Bay company that released the report.
California was up 14 percent from June, and down 11 percent for the year.
In a sign that banks are moving more slowly to foreclose on homes, or that fewer people are having trouble making payments, notices of default -- the first step in the foreclosure process -- dropped in both counties for the fourth month in a row. There were 645 new notices of default in Santa Clara County and 236 in San Mateo County, drops of 10 percent and 25 percent, respectively.
It is now taking almost two years on average for lenders to foreclose on a home after the borrower first misses a payment, said Sean O'Toole of ForeclosureRadar.
"There's not much incentive for banks to foreclose," O'Toole said. "They are not forced to by the regulators."
O'Toole said that in many cases it may be more profitable for banks to leave homes on their books, even though the homeowner has stopped making payments, than to sell them for a loss on the courthouse steps.
The number of homes in "foreclosure
limbo" -- in which a bank has filed a notice of sale but hasn't sold the home at auction -- continued to decline, down 7 percent in each county. But the number remains high -- 4,103 homes in Santa Clara County and 1,445 in San Mateo County.
Those figures are huge by historical standards, and may represent the cases in which lenders are still working with homeowners to modify loans. That process can take more than a year.
Redwood City print shop owner Jerry Albert has been working with his lender for a year to have the payment modified on his mortgage. The payments on the adjustable loan doubled last year, he said. Meanwhile, business is slow at the print shop he started after the company he worked for was sold.
Albert said his loan modification process has been frustrating -- including document runarounds, unreturned calls and having to start the process all over again when his negotiator left.