Home sales and prices are down from the same period in 2009. Home sales are down nearly 3%, and prices are down in 129 out of 150 metro districts according to a report just released by the National Association of Real Estate Brokers.

What This Means to You

Chances are your home is worth less than a year ago, and if you put your home on the market today it would take longer to sell it.

California default notices are up more than 10% over July of last year. A notice of default is a recorded document and the first step in the foreclosure process. In California, a lender cannot file a notice of trustee’s sale until 90 days after the notice of default has been recorded.

On the other hand, repossessions are down more than 35% for the same month. A repossession of the home by the lender is the final step in the foreclosure process.

Foreclosed homes scheduled for sale are up more than 90% during the same period. These are homes that have been repossessed by the lender and are scheduled for auction. In California, there are more than 120,000 foreclosed homes that are currently scheduled for sale.

What This Means For You, “Golden” State Resident

Overall, the housing market in California is still bleak. More homes are going into default, but lenders are reposing the homes at a slower rate. In the near term, this means that fewer foreclosed homes will be hitting the market in the third and fourth quarters of 2009, which is good for home prices.

On the other hand, it means that a huge inventory of distressed properties is building up. And those properties will eventually hit the market hard.

If you are behind on your payments, this is all good news as the above numbers indicate that lenders may give you more time to catch up on your payments, enter into a loan modification, or simply stay in your home rent free.

Recent studies indicate that while more homes are going into default, Lenders are slowing down on actually foreclosing on the homes.

There are a number of reasons for this:

• Lenders have realized that foreclosing on a home is expensive, typically costing them around $50,000.

• Lenders have realized that they aren’t very good at foreclosing on homes and selling them. Some studies have indicated that foreclosed homes sell for as much as 20% below market.

• Many lenders have realized that they receive better value through short sales, and are pushing homeowners in that direction. Others are more aggressively pursuing loan modifications during the default period.

• Lenders understand that by flooding the market with foreclosed homes they are driving down prices, thus lowering the value of the homes in their substantial inventories.

What This Means For You

If you have received a notice of default, which is usually the first step in the foreclosure process, or even a notice of sale, do not assume that your lender wants to foreclose on your home. You still may be able to work out a loan modification, forbearance agreement or pursue a short sale. So, don’t give up before the fight is over.

* Loan fees are referred to as points. This chart represents the average national points charged according to Freddie Mac. For example, if you are paying .6 points on a $100,000 loan your fees will be $600.