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Home Foreclosures in Dallas Slowed, but Defaults Surged

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By : John Cutts    99 or more times read
Home foreclosures in Dallas slowed in 2009, but defaults continued to surge to record levels, according to an Addison research firm.

The pace of foreclosure in the Dallas metro area slowed down by nearly 12 percent in 2009 compared to 2008, although defaults continued to surge. According to researchers, the number of actual foreclosures dropped because many lenders have been delaying foreclosures partly in compliance with the federal loan modification program.

In 2009, a total of 18,637 residential real estate properties were sold at public foreclosure auctions in the counties of Dallas, Collin, Denton, Tarrant and Rockwall. The number marked a decline from 21,174 auctioned units in 2008 and from 19,102 units in foreclosure in 2007.

Of these foreclosed mortgages, over 65 percent were taken out by borrowers between the years 2005 and 2009. At the time of foreclosure, the average mortgage loan balance was around $130,000.

Among Dallas neighborhoods, the areas which suffered most from foreclosures last year were Southeast Dallas, Grand Prairie, Frisco and DeSoto. The quarter with the most foreclosure filings was the first quarter, but the final quarter posted the highest number of foreclosure sales.

The research firm also reported that over 40 percent of home foreclosures in Dallas last year were repeat foreclosure filings. Repeats happened because lenders delayed the completion of their filings for a longer time. Either they were complying with the Home Affordable Modification Program to avoid bad publicity or they were avoiding the costs of maintaining foreclosed properties.

Because of these strategic delays, analysts are concerned about another flood of foreclosures in the coming months. They are also concerned about the rise in mortgage defaults statewide to over 10 percent of all residential mortgages throughout the state.

However, according to Scott Norman, head of the Texas Mortgage Bankers Association, it is possible that the pace of Texas home foreclosures will step up, but the number will not constitute a spike.

James Gaines, economist at the Texas A&M University, said that if the lenders are able to stagger their release of foreclosures, the housing market will be able to absorb the foreclosures. So far, the price impact of foreclosures has been manageable.

According to a report released recently by Clear Capital, distressed properties and home foreclosures in Dallas accounted for nearly 40 percent of total home sales in North Texas in the final quarter of 2009. In some neighborhoods, the percentage of foreclosures reached 60 percent.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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