Foreclosure filings -- default notices, auction sales notices and bank repossessions -- rose by 5 percent from September to 279,561 in October, according to Irvine, California-based research firm RealtyTrac. That means one in every 452 U.S. housing units received a foreclosure filing in October, the firm said in its report released on Thursday.
The California law, which requires lenders to contact homeowners and explore options to avoid foreclosure before initiating the process, took effect in early September and drove the state's foreclosure activity rates down, at a pace of 31.6 percent from August to September and 18 percent from September to October.
But in September, the California law helped drive the national foreclosure rate down, something that did not happen in October.
"Foreclosure activity in other places rose significantly enough to offset the drop in California," said RealtyTrac Senior Vice President Rick Sharga.
Years of lending to risky, or "subprime" borrowers that fueled the housing boom has created an unprecedented number of foreclosures due to the inability of many of those borrowers to pay their mortgages, particularly as interest rates reset and as plunging home values nationwide increasingly render properties worth less than the mortgage.
The numbers might also be showing the effects of the economic downturn, Sharga said. If they do not yet, they will soon.
"An economic downturn is traditionally a precursor to foreclosures, even in a normal foreclosure cycle," Sharga said. "This is not a normal foreclosure cycle by any means."
Moreover, California's law will likely not prevent most of the state's homes which are teetering on the brink of foreclosure from falling off the cliff, Sharga said.