THE GOOD FIGHT: From left, Donna Owens, Curtis Thomas and Rhonda Rucker of The Works Inc. are fighting the foreclosure problem in Memphis by helping at-risk homeowners. Their efforts – and those of other organizations – led to a decline in foreclosures in Shelby County for May. -- PHOTO BY ERIC SMITH

Foreclosures rose nearly 50 percent nationwide in May compared to the same month a year ago, but locally they increased only 4.9 percent. And foreclosures in Shelby County fell 16.6 percent from April, marking the first decline from the previous month since February.

Shelby County registered 509 residential foreclosures in May, the lowest of any month this year. That number was up slightly from the 485 in May 2007 but down significantly from the 610 in April 2008, according to the latest data from real estate information company Chandler Reports, www.chandlerreports.com.

The most recent numbers weren’t a complete surprise to Steve Lockwood, executive director of the Frayser Community Development Corp., who figured word of mouth is finally heightening awareness among homeowners that active measures can halt a foreclosure in its tracks.

“So many people know somebody who’s been foreclosed on and the stories are starting to circulate that it (foreclosure) is not inevitable,” he said.

Gap closing

Among Shelby County’s 509 residential foreclosures, 462 came from single-family homes, 17 came from planned unit development-detached homes, nine came from zero-lot-line homes, eight came from condominiums and the rest from other types of properties.

Those were nearly all improvements from the previous month: April saw 546 foreclosures from single-family homes, 12 from condominiums, 12 from planned unit development-detached homes and nine from zero-lot-line homes.

As for mortgage type, conventional adjustable-rate mortgages (ARMs) again led the way, although the gap between them and other types has shrunk. There were 95 ARMs in May and 94 conventional fixed-rate mortgages, the top two mortgage types among residential foreclosures.

Two mortgages taken at sale totaled 65, Federal Housing Administration loans totaled 62 and Veterans Administration fixed-rate loans totaled 15, rounding out the top five.

As for top Shelby County ZIP codes, Lockwood was happy to hear that Frayser’s 38127 no longer led the county in foreclosures – something it’s done nearly every month for the past couple of years.

He said he had a gut feeling Frayser’s foreclosure numbers would decline in 2008 because he felt the area was finally running its course.

“I’m glad to be relinquishing the lead,” he said with a laugh.

Instead, the leading ZIP for residential foreclosures was the 38106 ZIP of West Person/Elvis Presley Boulevard in South Memphis with 46 foreclosures. Frayser followed it with 42 and Raleigh’s 38128 ZIP with 33.

Both Frayser and Raleigh – usually at the top of the county’s leader board for foreclosures – saw decreases from the previous month. As Lockwood noted, Frayser has indeed seen its rate on a downward trend.

The area recorded 64 foreclosures in May 2007 and 53 in April 2008, giving people like Lockwood hope that the trend is turning around.

Working it out

Lockwood said not only are homeowners seeking counseling earlier in the process, but also lenders are more willing to work with those in jeopardy of default.

“There’s still plenty of traffic here, but I do think workouts are getting easier,” he said. “I would love to think it’s because the lenders are seeing the writing on the wall and seeing that the best solution in their interests, as well as the homeowners’ interests, is a workout rather than a foreclosure. We have felt a lot more flexibility from lenders in the last 90 days. And that’s a beautiful thing.”

Rhonda Rucker of The Works Inc. also has seen the benefits of lender workouts. Just last week she helped stop a foreclosure in a matter of days by working tirelessly with the bank on a workout program for her client.

Rucker said there are numerous ways to negotiate with a lender, including a special forbearance plan, which includes a down payment and repayment plan stretched out over a few months; a loan modification that takes the amount owed and puts it in the back of the loan; or taking an ARM and lowering the rate and making it fixed-rate either temporarily or permanently.

“The lenders are working with us – if the clients don’t wait until it’s really, really too late,” Rucker said. “I’ve had clients come in and their houses are already foreclosed. Of course, we can’t turn back the hands of time at that point.”

Time will tell if May is an anomaly or a true sign of turnaround for Shelby County’s foreclosure rate.