Foreclosures soar in Mass. in July

“Homeowners are still under duress, and the market isn’t getting any better,’’ said Vincent M. Valvo, editor-in-chief of the industry publication Banker & Tradesman. “We are likely to see increasing foreclosure activity for the next few months.’’

In July, 1,243 foreclosures were finalized, almost an 80 percent increase from the same month last year, according to Warren Group, a Boston company that tracks local real estate and publishes Banker & Tradesman.

There have been 8,676 foreclosures completed during the first seven months of the year — an increase of 60 percent when compared with the same period in 2009. At that rate, foreclosures for 2010 could surpass the 12,430 recorded in 2008, the highest number on record, according to Warren Group.

Reasons for the spike in foreclosures are many, housing specialists and economists say, including the failure of government programs to spur lenders to modify mortgage loans.

“They are foreclosing on people who are willing to and have the resources to address their delinquencies,’’ said Gary Klein, a Boston lawyer who represents clients fighting foreclosure.

“I’ve done this work for 25 years, and I’ve never seen anything like this. I’ve never seen so many people in a position to work something out who are getting rebuffed.’’

Kevin M. Cuff, outgoing executive director of the Massachusetts Mortgage Bankers Association, said many mortgage servicers are finalizing foreclosures of delinquent loans either to clear their books or get ahead of a new state law that extends the time homeowners have to save their homes to 150 days from 90 days. He said many loan modifications have not been successful because homeowners are out of work and can’t even afford to make reduced monthly payments.

“Many of the [modifications] are going into redefault due mostly to rising unemployment,’’ he said. “All federal programs are much less successful than originally hoped.’’

Although foreclosure deeds are increasing, the number of homeowners getting into financial trouble has slowed slightly. Foreclosure petitions, the first step in the process, fell to 2,307 in July, a 20.4 percent drop from the same month in 2009, according to Warren Group. There were 15,645 foreclosure petitions filed during the first seven months of the year, compared with 16,712 during the same time last year.

Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, said the number of foreclosure deeds should slow, given the decrease in petitions. For now, however, the wave of foreclosure deeds is “disturbing,’’ he said.

“This is continuing to reflect that banks and mortgage companies are doing everything they can to rid themselves of nonperforming loans,’’ Bluestone said. “They are disturbing numbers to see that number of people losing their homes.’’

In a measure of the housing market’s health, a national report released yesterday showed home values nationwide rose 4.4 percent in the second quarter. The S&P/Case-Shiller Home Prices Indices, a leading measure of home values that records repeat sales, found values in the Boston area increased 1.2 percent in June compared with the month before.

But the encouraging news on values isn’t likely a sign of better times ahead for real estate, said David M. Blitzer, chairman of the index committee at Standard & Poor’s. He cited weak home sales in July following expiration of the federal home buyer’s tax credit, along with foreclosure numbers. “If this relative weakness in demand continues, it will likely filter through to home prices in coming months,’’ Blitzer said.

Jenifer B. McKim can be reached at jmckim@globe.com.