The percentage of homeowners with mortgages in trouble hit a record in the second quarter of 2009, which ended June 30, according to information released by the Mortgage Bankers Association. The Association expects those dire numbers to continue though the end of 2010. In Flagstaff last week, there were only three foreclosure sales; the week before, only four.

Subprime or adjustable rate mortgages no longer are the leading cause of foreclosure. Prime mortgages are in trouble because homeowners have lost their jobs. Learn more about this delinquency and foreclosure trend from a MarketWatch.com article that appeared after the MBA press release.

It’s important to note the difference between “in foreclosure” and foreclosed. “In foreclosure” means that a homeowner is in default on payments and has received a notice of foreclosure (or in Arizona, “Notice of Trustee Sale”). “Foreclosed” means the sale has happened and title has been transferred either to the bank (in most cases) or to a third-party bidder.

Homes where the mortgage payment is delinquent or where a notice has been sent but the actual sale has not occurred may be saved from the trustee or judicial sale in a variety of ways. Most often, a market buyer is found and the bank agrees to forgive some of the balance due on the secured note. Then title is transferred to the new homeowner in what is called a short sale.

Right now in the Flagstaff real estate market, there are between 30 and 50 homes under contract to sell short. A year ago, folks shied away from short sales and only about one home per month was rescued in this way. Now that short-sale listings are saturating the available list of Flagstaff homes, and agents and banks have more experience with them, the transactions are more numerous and generally faster than they were a year ago. Short sales, thus, are one reason that foreclosures remain low in Flagstaff. Another is that Flagstaff’s unemployment rate is lower than in the rest of the state and the nation.

To buy or sell any Flagstaff home, contact us: Ann Heitland at RE/MAX Peak Properties. (Remember, your goal is to buy a home that matches your needs at the best price possible. We'll consider foreclosures and short sales as part of the overall set of opportunities for you.)

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