Tucson “Shadow Inventory” Raises Foreclosure Filings

BY: Carli Brosseau at:  VALLEE GOLD TEAM – JUNE 13TH, 2012

The “shadow inventory” of Tucson homes held up in the foreclosure process while lenders weathered the robo-signing scandal may be coming into the light.

The number of foreclosure notices issued in the Tucson area has been rising for the past four months despite signs of a competitive housing market, rising home prices and reports that banks are more willing to negotiate short sales.

In Pima County, 984 borrowers received notice last month that their mortgage loans were in default and their property had been scheduled for auction.

That’s a 32 percent increase over the same month the year before, and an 8 percent increase compared with April, data from the County Recorder’s Office show.

The last time the monthly tally was this high was in October 2010.

“Even though Arizona was not a robo-signing state, (financial institutions) pretty well stopped foreclosures across the board,” said Bill Scharf, a senior loan officer at Nova Home Loans.

The federal government and states including Arizona reached a $25 billion settlement in February with five banks, including Bank of America, Wells Fargo and JPMorgan Chase, over abusive mortgage practices. In some cases, companies that process mortgages failed to verify the information on foreclosure documents. The worst practices, known collectively as “robo-signing,” included employees signing documents they hadn’t read or using fake signatures to sign off on foreclosures.

Lenders slowed the pace of foreclosures as they negotiated with attorneys general for more than a year over the allegations. After February’s settlement, banks were expected to resume property seizures.

Scharf anticipates that the settlement will mean more homes will make their way through the foreclosure process.

There have been 2,217 foreclosure sales so far this year.

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