Is the foreclosure phenomenon at last beginning to peak in California?

Home Front is hearing rumblings that October saw a "meaningful decline" in various foreclosure filings for the first time in two years. The familiar industry trackers – MDA DataQuick, ForeclosureRadar and Foreclosures.com – all acknowledge the change.

They've watched a steep drop in notices of default, those formal warnings issued when borrowers fall two or three months behind on payments. They've seen drops in the number of houses auctioned on the courthouse steps. They've watched the same for trustees deeds recorded with county offices as the final action of foreclosure.

What does it mean?

It's still early to speculate whether this might be the beginning of the end. No one wants to raise false hopes in a state that has already seen 275,000 households hand their keys back to the bank since January 2007.

Yet the immediate direction is clear. MDA DataQuick analyst Andrew LePage, said, "Trustees deeds in Sacramento, statewide, everywhere, are trending down from September to October. It's a meaningful decline."

Sean O'Toole, chief executive officer of ForeclosureRadar, said a 39 percent drop in the number of California homes auctioned on courthouse steps from September to October "was a huge drop, much more than anything we would have expected."

There were 14,042 auctions in October, compared with 23,049 in September, he said.

Alexis McGee, president of Foreclosures.com, reported a 22 percent drop nationally in October home repossessions compared with September. She said October's tally was the lowest since May.

"The nation's foreclosure free fall may be subsiding," she said recently. McGee's theory is that "efforts by lenders, banks, organizations and government entities to work with strapped homeowners to avoid foreclosures are beginning to pay off."

LePage and O'Toole have similar hunches.

"What we have seen over the last 60 days is a lot of announcements around foreclosure moratoriums and loan modification programs," said O'Toole. He also cited Senate Bill 1137, which makes lenders try harder to talk with California borrowers before foreclosing. That legislation prompted a noticeable slowdown in notices of default as early as September.

The good news, said O'Toole, is that the number of foreclosures may continue falling in the short run. The bad news is an abundance of new loan modifications could be pushing the foreclosure problem out three to five years.

"It's sort of like, 'let's put these people all in teaser rates and hope it goes away.' It's sort of a Hail Mary pass," he said.

Most people will clearly root for the first scenario. Home Front will watch and keep you posted on what develops.

One thing is for sure in mortgage lending: Foreclosing on families and evicting them during the holidays is a sure ticket to bad press.

Some think that's partly why U.S. mortgage giants Freddie Mac and Fannie Mae have declared a holiday foreclosure moratorium.

The two said nobody gets the boot from Nov. 26 to Jan. 9.

But that's just 16,000 mortgages nationally. Locally, some borrowers are so far down the foreclosure road with lenders that it's too late. In Sacramento County, evictions continue with no pre-holiday lull in sight, said Sgt. Gary Shintaku of the Sheriff's Department Civil Division.

"One of our guys in the south county had nine evictions today, and four are for foreclosures," he said Tuesday.

Foreclosure evictions have leveled off north of the American River in recent months, Shintaku said. But south of the river in Sacramento County they're still rising slightly, he said.

"As we're coming to the holidays, it's still the same," he said, "the status quo."

Here's a news flash about the surge in Sacramento-area home sales since April: 2008 sales have already passed last year's 12-month total of 33,267.

The 2008 January through October tally: 33,961 sales of new and existing homes in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That's according to MDA DataQuick.

This year's sales burst has 2008 resuming a normal pattern in which sales totals are higher than the previous year.

That was the case from 1995 through 2004.

In 2005, 2006 and 2007, sales were lower than the previous year.

It's safe to say that price cuts of 20 percent to 34 percent the past year – driven primarily by sales of banks repos – played a key role in the return to tradition.

Call The Bee's Jim Wasserman, (916) 321-1102. Read his blog on real estate, Home Front, at www.sacbee.com/blogs.