Experts say that decline in California foreclosure activity is not just a seasonal decline.

New foreclosure filings, including Notice of Default (NOD) and Notice of Trustee Sale, declined significantly in December 2009 as compared to the prior month.

While Notices of Default dropped a significant 17.5% during December 2009, they actually dropped 32.5% on a daily average basis. This is due to the fact that December had 22 days on which documents were recorded, vs. 18 days in November.

According to ForeclosureRadar, we have not seen a similar December drop in recent years, so this is not simply a regular seasonal decline. The graph below shows the Notice of Default and Notice of Trustee Sale trends from July 2008 through December 2009.

Sales to third parties, or investors on the courthouse steps, are also declining, with December sales 28.89% less than in November. Experts say that this is due to a significant decrease in foreclosure discounting by lenders, rather than a lack of interest by the investors. Again, remember that the number of working days in December was less than November, so these percentages are actually higher when calculated on a daily average basis.

On the downside, it seems the promises of the Obama administration are failing, as pre-foreclosures continue to rise instead of being eliminated by workout programs like the Making Home Affordable Program. No shocker here, as most of the Federal programs to date have fallen way short of their stated goals in helping homeowners in distress.

The foreclosure inventories show mixed results, with estimated preforeclosure inventories remaining relatively stable at a 0.4% increase over November, bank owned (REO’s) showing a modest decline of 2.64%, and homes scheduled for auction showing a modest increase of 3.41%.

Los Angeles County remains the highest area in the state for foreclosures, but then it’s one of the most populated counties as well. Notices of Default (NOD’s) declined sigificantly, with new NOD’s filed at the rate of 5,495 in December 2009 as compared to 8,622 in December 2008. Notices of Trustee’s Sale went in the opposite direction, with 6,071 in December 2009 and 5,155 in December 2008. Other California counties with significant foreclosure activity include San Bernardino, San Diego, Riverside and Orange.

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