July foreclosure starts hit highest level of 2011

By Chris Reidy, Globe Staff

More than 1,400 foreclosure proceedings were started in Massachusetts in July, the highest monthly number so far in 2011 and the highest number of monthly starts since September, the Warren Group reported this morning.

Headquartered in Boston, the Warren Group tracks local real estate activity and publishes Banker & Tradesman.

Foreclosure petitions are an early step in the foreclosure process. There were 775 actual foreclosures in Massachusetts in July, down 38 percent from July 2010, the Warren Group said.

Foreclosure petitions were also down from a year ago. Real estate specialists have said that the year-to-year falloff can be largely attributed to lenders pulling back on foreclosures, not an improving economy, and many expect the number of foreclosures to soon start increasing. Foreclosures started to slow nationwide in 2010 after several bank employees - now known as robosigners - acknowledged that they signed foreclosure-related documents without reviewing the paperwork. The admissions prompted widespread scrutiny of foreclosure practices, and many major US lenders voluntarily halted or delayed property-takings while they reviewed their procedures.

But now the pace of foreclosures seem to be accelerating.

In a statement, Banker & Tradesman managing editor Cory S. Hopkins said: “The foreclosure process is showing signs of acceleration. For the past two months, foreclosure petitions have markedly increased, which proves that lenders are beginning to act more swiftly. Despite the drop in foreclosures from a year ago, homeowners are still struggling. A weakened housing market and poor economy does not bode well for consumer confidence.”

But Hopkins also noted: “While some feared there would be a surge in foreclosures following several banks delaying and examining their own proceedings, it doesn’t appear that completed foreclosures are climbing at a rapid pace. In fact, foreclosure deeds are down from a month ago which may mean more distressed homeowners are working out alternatives to foreclosure, either through short sales or loan modifications.”