Home foreclosures in Phoenix slowed in February this year, but defaults surged, based on reports from NetValueCentral and Information Market.
In February, pre-foreclosures in metro Phoenix climbed up to 7,604 filings, a jump of 12.45 percent from the 6,762 trustee sale notices filed in January.
According to analysts, the drop in pre-foreclosures meant that more lenders were giving troubled homeowners time to work out loan modifications or were delaying the completion of the foreclosure process for their own purposes.
Due in part to loan modification processes or short sale negotiations, the number of housing foreclosures dropped to 4,271 in February, down by 4.1 percent from the 4,452 postings completed in January.
The drop in completed foreclosures may have helped in improving prices for both nondistressed homes and foreclosed homes. According to Phoenix firm NetValueCentral, the per-square-foot price of a nondistressed house jumped up in February to $106.48, the highest level reached in the metro area over the past seven months.
The per-square-foot price for foreclosed houses rose to $80, a jump of 2.56 percent from the January rate of $78.
In the first three quarters of last year, home foreclosures in Phoenix dominated total home sales in the Valley, then slowed in the final quarter. But in January, foreclosures started again to overtake conventional sales, although the gap between the 2 types of home sales has been narrowing.
In February, the still surging pace of Arizona home foreclosures got attention from President Barack Obama when he and his advisors included Arizona among the 5 states that will receive a combined total of $1.5 billion in funding from the Troubled Asset Relief Program.
While grants given to states and cities under the Neighborhood Stabilization Program were designed to rehabilitate abandoned foreclosure properties, the money allocated by Obama in February was meant to help cut down the number of foreclosure properties. Obama, in his speech, said that more unemployed homeowners should be helped with the $1.5 billion funding.
According to Michael Trailor, head of the Arizona Housing Department, the state will continue funding its foreclosure prevention hotline. With the additional funding, the department can carry out more innovative solutions to the crisis, including giving grants that lenders match so that the home loan principal and monthly payments could be reduced significantly.
With a number of distressed homeowners helped with substantial payment reductions, it is hoped that the pace of home foreclosures in Phoenix would slow down further.