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California is seeing an unprecedented number of scheduled foreclosure sales being canceled, ForeclosureRadar is reporting in its October report, released this week. The proportion of lenders pulling properties from foreclosure auctions rose 62 percent compared to a month ago, and is down nearly 37 percent from last year.

“The California Homeowner Bill of Rights that takes effect in January 2013 is beginning to impact foreclosure trends,” says Sean O’Toole, ForeclosureRadar’s founder and CEO. The component of the bill with the most immediately noticeable impact is a ban on the formerly common practice of “dual-tracking,” where banks continue to attempt to foreclose on a home while simultaneously working with a delinquent borrower to approve a short sale. Under new rules taking effect next year (but apparently already widely being implemented by lenders), a bank must suspend foreclosure proceedings if a short sale is approved, a practice criticized by O’Toole.

“This is another example of where changes in foreclosure trends are driven by government intervention, and not necessarily economic recovery. While the impacts are still unclear, the elimination of dual tracking may avoid some unnecessary foreclosures, but will lengthen the foreclosure process and delay ultimate recovery,” O’Toole predicts.

1,080 Notices of Default, which signal the beginning of the foreclosure process, were filed across San Diego County last month, representing a drop of 47.5 percent from a year ago. Individual statistics by city weren’t provided in the report, but unless half of the properties were located within San Diego city limits the assumption that 6,000 Notices per year would be filed, thus making yesterday’s Property Value Protection Ordinance fee revenue neutral, could be called into question.

Of all the properties scheduled to hit the auction block last month, 1,238 saw their sales canceled, while only 246 were actually sold to third-party buyers and 279 more reverted back to the banks calling for the sales. The number of bank-owned properties on the market has fallen from 5,691 a year ago to 3,497 today, further exacerbating the problem of limited housing inventory and contributing to the price appreciation seen in recent months.

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