Significantly more properties entered the foreclosure process during August in the nation’s hardest-hit markets, including battered parts of inland California and other areas in the West, as Bank of America Corp. stepped up its activity in states where a court order is not needed to take back a home.

Among the states with the highest foreclosure rates, California led the pack in new foreclosure proceedings with an increase of 55% over July, according to data from Irvine-based RealtyTrac. Metro areas in the inland parts of California posted big jumps, with Riverside and San Bernardino counties soaring 68%, Bakersfield 44% and Modesto 57%, the real estate information company said.

A separate report found crosscurrents in Southern California’s housing market during August, with sales increasing but prices continuing to fall.

Sales were up 8.6% from July and 6% from August 2010, with a total of 19,654 properties selling across the six-county Southland in August, according to DataQuick of San Diego. The jump in sales was driven partly by a quirk of the calendar that left August with more business days than usual.


The region’s median home sale price fell 1.4% from July and 3.1% from August 2010 to hit $279,000, to some extent reflecting a larger share of foreclosed properties changing hands.

“Scratch beneath the surface and there’s not a lot to cheer about this month. Home sales were up from a year earlier but remained far below average,” DataQuick President John Walsh said in a statement. “Many would-be buyers can’t find financing, and others who want to make a move now are stuck because they owe more than their homes are worth.”

Together the two reports sketch a portrait of depression in housing, which continues to weigh heavily on the nation’s economy.

A large chunk of the California’s foreclosure increase came because of Bank of America, RealtyTrac said. Bank of America is the nation’s largest mortgage servicer, and other big banks often follow suit, analysts said.


“Nobody really wants to be a leader in foreclosed properties but, for better or worse, that is what Bank of America is,” said Guy Cecala, publisher of Inside Mortgage Finance Publications.

Sarah McEachern said she and her husband, Michael, experienced the surge firsthand last week, receiving a notice from Bank of America that foreclosure on their Riverside home had begun after a long struggle with the bank. The couple ran into financial trouble in 2008, when Michael McEachern lost his job of more than 15 years laying concrete for commercial construction companies, she said.

They worked through insurance money that helped pay the mortgage for a year and then through all of their savings as they negotiated for a loan modification. They were denied, she said, because they were current on the mortgage. They plan to reapply for a modification because her 47-year-old husband just got a new job.

“We might run out of time,” said Sarah McEachern, 40. “We are at the point where he just got hired, but they want to see a paycheck, and now we are scrambling to get him on the payroll.”


Bank of America has improved its repossession practices and so it increased foreclosures in the so-called non-judicial states, such as California and Nevada, where a court order isn’t required to take back a home, spokeswoman Jumana Bauwens said. Such a pickup is necessary if the real estate market is to get over its long slump, she added.

“Strong gains like that from July to August demonstrate our progress,” Bauwens said. “We are seeing continued improvements in foreclosure volumes in many areas of the country, and that is a potential harbinger for housing market recovery.”

Bank of America and the nation’s other large mortgage servicers remain embroiled in settlement discussions with state attorneys general and federal regulators over faulty foreclosure practices. Those discussions were expected to have produced a settlement of more than $20 billion by now, as well as lead to changes in mortgage servicing.

But talks have stumbled over how much the banks should pay, as well as to what degree they will be released from liability from future investigations. New York and Delaware have agreed to work together to pursue a wider-ranging probe into Wall Street’s role in the mortgage meltdown, and California Atty. Gen. Kamala D. Harris has signaled that she might join that effort.


In a report slated to be released Thursday, community organizing group Alliance of Californians for Community Empowerment called on the state attorneys general to resist any settlement that would release banks from claims such as the ones being investigated by New York and Delaware. Separately, the group MoveOn sent an email to its members urging them to call on Harris to refuse a deal that could prevent such future investigations.

Geoff Greenwood, a spokesman for Iowa Atty. Gen. Tom Miller, who is leading the discussions on behalf of state prosecutors, said the negotiations would not limit such investigations.

“Any state attorney general right now and in the future is free to pursue criminal cases, regardless of whether we reach a settlement that they sign onto,” he said. “We have conveyed to the banks and we have stated publicly that we will not release all civil liability. Indeed, the release of civil liability will be limited.”

Foreclosure filings nationally — default notices, scheduled auctions and bank repossessions — were reported on 228,098 U.S. properties in August, a 7% increase from July, though still down nearly 33% from August 2010, according to RealtyTrac.


But new foreclosures, or default notices, were filed on 78,880 U.S. properties in August, a nine-month high and a 33% jump from July. Default notices declined 18% from August 2010 and were 44% below the peak of 142,064 default notices in April 2009.

alejandro.lazo@latimes.com