Foreclosures in Santa Clara, San Mateo counties take nearly a year to complete

Banks foreclosed on hundreds of homeowners in Santa Clara and San Mateo counties in March, even as thousands more are stuck in a foreclosure process that is now taking nearly a year to complete -- the longest time since the housing crisis began.

The slow pace has added to a backlog of more than 14,000 homes in the foreclosure process in the two counties, according to a report on March foreclosure activity released Tuesday by a real estate research service.

That represents a huge number of homes that are either empty and have been taken over by lenders or where owners have stopped making payments.

The foreclosure process at every step continues to be slowed by a "robo-signing'' scandal last year that was recently settled by major lenders, said Sean O'Toole, chief executive of ForeclosureRadar, the Discovery Bay information service. Lenders had stopped most foreclosure activity to investigate charges they were skipping important legal steps in the foreclosure process.

The seemingly never-ending foreclosure crisis acts as a damper on the housing market, depressing prices in neighborhoods where banks are selling the homes on the courthouse steps or owners are selling their homes for a loss.

"It's bad for the industry, bad for neighborhoods that have homes sitting vacant for that long, and bad for local governments that don't get that local revenue for a significant period of time," said Dustin Hobbs of the California Mortgage Bankers Association.

A lengthy loan-modification process also is soaking up more time, real estate professionals say, with some homeowners ending up in foreclosure after failing to get lenders to lower their payments.

Banks "can spend a significant part of that total time trying to help somebody with a modification, and yet it still doesn't happen," said Joe Alderese with Alain Pinel in Morgan Hill.

The figures don't include homeowners who are behind on their payments. "There's another group that aren't making payments that haven't entered the foreclosure process," O'Toole said.
"At the end of the day, we're still dragging our feet on dealing with this problem. There's no easy solution," he said.

In the two counties and the state, foreclosures are taking more than 300 days, which a mortgage banking group calls "worrisome."