Rate of Tampa Bay foreclosures begins to ebb

By James Thorner, Times Staff Writer In Print: Friday, July 17, 2009

With the subtlety of a cement sack loosed from a bank skyscraper, another 7,200 foreclosure cases dropped into our courtrooms last month.

That's 7,200 houses — the residential stock of a typical small town — plunged into mortgage default in a single month in Pinellas, Hillsborough, Pasco and Hernando counties.

But after digging through charts put out by RealtyTrac, the California company that publishes market-by-market foreclosure data, June could be the month when foreclosures began beating a retreat.

As I've repeated in earlier columns, home sales and prices have already begun to right themselves in the Tampa Bay area. Sales have risen in nine of the past 10 months. Prices seem to have stabilized — and even risen a smidgen — since January.

What's been lacking is evidence that insolvent homeowners would bleed fewer of their deeds onto the foreclosure market. That evidence might have emerged from June's foreclosure report.

After a punishing sequence of months in which local foreclosure filings, measured year over year, rose by 30 to 50 percent, foreclosures in June posted a gain of only 12 percent.

The number was impressively modest for several reasons. Foreclosures across Florida rose 31 percent to reach 52,899 in June. Nationally, June's 336,173 foreclosure filings represented an increase of 33 percent from a year earlier.

On top of that, at the start of the year economists predicted a wave of summer mortgage defaults as unemployment deepened and the state's foreclosure moratorium petered out. But June came and went without any spikes on the chart.

Why the reprieve? The government's foreclosure prevention programs, for all the initial hoopla about helping millions of hard-pressed homeowners, have served a piddling number of mortgage borrowers so far. At last count, loan restructuring has benefited fewer than 100,000 across the country.

A better explanation lies with the housing market itself. According to the Greater Tampa Association of Realtors, home sales in June totaled 1,714. That's a decline of almost half since June 2005, but monthly home sales haven't been that high since December 2006. Sales of distressed properties — bargain priced and attractive to cash buyers — have led the way.

Nevertheless, national economists remain pessimistic about foreclosures. The latest prediction, which has grown to mythic stature among national reporters, is the wave of "Alt-A" foreclosures that's supposed to capsize our market anew.
These were loans made to middle-of-the-road borrowers. Strapped to the hilt in the recession, these homeowners are supposedly about to mail their house keys back to the bank all at once.

Or so the money gurus inform us.

Dub me unconvinced. At least in our neck of the woods, foreclosures have been far more than just a subprime phenomenon the past two years. They have already cut into many middle-of-the-road borrowers around here. Those not peddling their distressed homes on the cheap are lobbying their banks for easier terms.

Yes, foreclosures in the Tampa Bay area are still rising, but they're rising at a dramatically slower rate. If we're lucky, June will mark the start of the Summer When Losing Your Home Lost its Groove.