From Lily Leung, the new real estate reporter for the Union-Tribune – we’re rooting for you Lily!

Fewer San Diego homeowners defaulted on their mortgages in February, and foreclosures have decreased year-over-year for the fifth consecutive time.

Could this signal meaningful progress in the county’s distressed market?

Yes and no.

“It’s hard to tell,” said Norm Miller, real estate professor at University of San Diego. “We don’t know how overwhelmed the lenders still are … or if in fact we have less (distressed) inventory … I think there’s truth in some of each.”

In February, the county recorded 1,373 mortgage defaults, the first step in the foreclosure process. That’s down 11.3 percent from January and 36.6 percent one year ago.

There were 896 foreclosures in February, down 6.6 percent from January and 7.9 percent the same time last year.

Real estate experts are mixed on what those figures mean for the county because so many factors are involved, including the “robo-signing” fiasco among banks, processing back-ups and slight job growth within the region. Another factor: Government programs that are artificially stimulating the economy and normal changes in the market.

Andrew LePage, a DataQuick analyst, said it’s too early to say if San Diego County is seeing a “downward trendline” in defaults and foreclosures. But he noted that the number of mortgage delinquencies, though historically high, have been decreasing and are starting to flatten.

“The big picture is, we’re through the worst of it,” LePage said. “If delinquencies are any indication, and that continues through next year, we may see filings go down.”

Miller, with the University of San Diego, said February’s numbers could be indicative of a slightly improving economy, but more realistically, he said, it could mean lenders are contracting less with outside companies to process documents after the robo-signing issue was revealed.

“They may be afraid to contract out services and have to do them themselves and are slower at it,” Miller said.

Others are more optimistic.

Craig Bramlett — a district manager and loan consultant at W.J. Bradley in San Diego — says he’s noticed both foreclosures and notices decrease and attributes that to a stabilizing local economy.

If both continue to fall, it could have two effects: Buyers who are looking for bargains will be driven away, or consumers who have been waiting for confirmation “that we’ve hit bottom” will jump into the market, Bramlett said.

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