Oct. county foreclosures up vs. 2009 level

Unemployment, health issues cited; notices climb 7.5%
2010-11-03T00:00:00Z 2014-08-20T09:37:20Z Oct. county foreclosures up vs. 2009 levelDale Quinn Arizona Daily Star Arizona Daily Star
November 03, 2010 12:00 am  • 

The onslaught of local foreclosure filings continued through October.

In Pima County, 1,019 financially stressed property owners received notice that their loans were in default, Recorder's Office data shows.

That's up 7.5 percent from the same month last year and more than quadruple the number of foreclosure notices filed in October 2006.

Persistent unemployment and health issues are the main forces that drive homeowners into default, said Cheri Horbacz, program manager of Don't Borrow Trouble, a Pima County credit-counseling agency.

Credit counselors have seen no letup in the number of people struggling to make payments on their mortgages, Horbacz said. "If anything, the demand has been even greater," she said.

Foreclosure notices, filed in the Pima County Recorder's Office as trustee sales, let homeowners know a loan is in default, but they don't mean a family is necessarily going to lose its house.

A small percentage of homeowners get loan modifications, and some distressed property owners can get short sales, said John Strobeck of Bright Future Business Consultants.

In a short sale, the bank agrees to sell a home for less than what is owed on the mortgage, and - when contractually specified - forgives the rest of the debt.

Still, many of the notices will result in foreclosure sales, which are filed in Pima County as trustee deeds.

In October, there were 560 trustee deeds recorded in Pima County, which is down about 4 percent from last year. The year-to-date total through the end of October is up substantially over last year, though. In the first 10 months of 2010, there were 6,001 foreclosure sales, a 29 percent increase over the same time period in 2009.

On the one hand, housing experts say that means financially distressed properties are leaving the market. On the other, more families are losing their homes.

Strobeck said another factor contributing to the high number of foreclosures is the number of five-year, interest-only mortgages that are resetting this year. Those loans depend on rising property values to grow equity in a home, but that didn't happen.

Those homeowners are facing dramatic increases in their mortgage payments, Strobeck said.

In order for the housing market to recover, the banks need to work through those loans. For that reason, Bank of America's recent announcement that it had temporarily halted foreclosure sales only slowed progress. "Anything that delays going through those and getting these sales completed - getting those foreclosures completed - is going to lengthen the mess," Strobeck said.

The difference in foreclosure sales from October 2010 compared with October 2009 isn't substantial enough to point to a specific trend, Strobeck said. It's also not clear that Bank of America's moratorium had any effect on Pima County's numbers, he said.

Strobeck, who tracks housing sales in Pima County, said the distressed-property sales, whether they be short sales or foreclosures, have been driving the resale market. In September, foreclosure sales made up 35.8 percent of the resale market, a trend that continued in October.

When short sales are added, the percentage is pushed significantly higher, Strobeck said.

Foreclosure statistics

Trustee-sale notices

2010 2009 2008 2007

October 1,019 948 921 483

September 1,090 1,008 782 394

Trustee deeds

2010 2009 2008 2007

October 560 585 379 186

September 612 472 390 145

Contact reporter Dale Quinn at dquinn@azstarnet.com or 573-4197.

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