Even as foreclosures continue to grow, homeowners and lenders are increasingly using methods to avoid them that were largely unknown before the housing crisis.

Many lenders have become more open to loan modifications or short sales instead of foreclosure, said Ken Ryan, a branch manager with Long Realty. At the same time, real-estate agents and bankers have grown more accustomed to dealing with those procedures, he said.

Short sales, especially, were largely unheard of during the housing boom, but they have become common enough that Long Realty has set up a team of agents who specialize in them.

Through the complex short-sale process, homeowners sell their house for less than they owe on it, and, when specified through negotiation, the lender agrees to forgive the rest of the debt. The sales can take months and require patience and persistence from buyers, sellers and real-estate agents. They also demand the determination of real-estate agents, who must coordinate the buyer, seller and bank in order for the deal to move forward, said Pattie Johnson, a short-sale agent with Long Realty.

But the effort can work for cash-strapped homeowners who fall behind on their payments and don’t see a way out.

"The overall impact on their credit is often going to be worse if they just walk away and let the property foreclose," Johnson said.

Foreclosures persist

Despite any effort to counter them, the onslaught of foreclosures in Pima County shows no immediate sign of ebbing. In July, the county issued 1,111 foreclosure notices, 29 percent more than in June. The notices tell property owners their mortgage payment is in default, but don’t necessarily mean it will go into foreclosure.

That’s the highest number of foreclosure notices issued by the county since last August, when 1,130 of them were mailed out. Meanwhile, foreclosed properties have been selling at auction at a faster pace this year than last - 4,157 between January and July, compared with 3,185 during the same period last year.

The high number of sales can be a good sign - it shows distressed properties are dropping out of the market. But it also means more people are losing their homes.

The trend in Pima County is mirrored by national statistics. In July, foreclosure filings across the country increased 4 percent compared with the previous month. The trend is likely to continue, real-estate trackers say, as a slew of interest-only mortgages that depended on rising home values to grow equity are resetting this year. Those homeowners may face default as their monthly payment doubles or even triples.

Dana Jones, a 39-year-old cosmetologist, recently returned to Tucson after a short-sale deal fell through that she and her real-estate agent had been working on for months. Jones and her husband, Damian, had moved to North Carolina for work, but her husband lost his job in commercial construction, and the couple found themselves falling behind on mortgage payments.

Jones said she was able to find a buyer who agreed to pay $70,000 for her Snow Hill, N.C., home. She owed $75,528.

Again and again, she said, she filed paperwork with Bank of America to see if she and her husband could qualify for a short sale, but she didn’t get an answer.

"Six months into the process, my buyer walked away because he couldn’t sit and wait anymore," she said.

Bank of America did not respond to specific questions about Jones’ case or its short-sale or loan modification processes. But a media representative e-mailed with press materials saying the bank has successfully completed 160,000 loan modifications.

Jones and her husband moved back to Tucson - where their families live - when they found work here. Now she said she’s waiting for the bank to foreclose on her North Carolina property. "It’s caused me great anxiety. I haven’t been able to sleep," she said.

Getting help

Homeowners have other options that might help them avoid foreclosure, such as a loan modification or a deed in lieu, where the lender and borrower agree the lender will take back the property without foreclosure.

"Most investors are willing to work with a borrower if they show a surplus in their income," said Oscar Gastelum, a foreclosure prevention counselor with the Primavera Foundation. Those homeowners who’ve seen a significant pay cut and will struggle to make payments even after a modification might not get one, he said.

At the same time, homeowners who can afford their mortgage shouldn’t expect to get a modification either, Gastelum said.

Bank representatives say foreclosures are costly all the way around, so it’s best to prevent them.

"It’s been our position since the beginning of the housing crisis to help our customers avoid foreclosure," said Carolyn Mitchell, regional community development manager for Wells Fargo.

The bank has offered foreclosure-prevention workshops to educate nonprofits about how to assist people struggling with mortgage payments. It also offers face-to-face counseling, Mitchell said.

To cut back on complaints people have about refiling the same paperwork, Wells Fargo recently began assigning one representative to handle a customer’s loan modification process, Mitchell said.

"That has really helped with the documentation trail and making sure the borrower knows who to call," she said. "It’s the same person each time."

Delays in the loan modification or short-sale process can be daunting for homeowners, Gastelum said. They’re already struggling to make payments on their mortgage, often due to unemployment or medical bills, and waiting on a response from the bank only adds to their stress, he said.

Michaelle Frederique, who works for the state, said she is on her fourth attempt to get a loan modification from Bank of America. She began to fall behind on mortgage payments - though she is paying part of what she owes each month - last year when the state began cutting employee wages.

She said she was approved for the next step in a loan modification process in April, and filed the needed paperwork, but waited months for a response.

Selling her home near West Ina and North Thornydale roads isn’t an option because she paid more than $190,000 for it five years ago and wouldn’t be able to get anywhere near that now. She’s also fixed up her kitchen and added tile floors.

"I’m not about to give up," she said. "I’m not going to give them my house."

Regardless of the circumstances that lead to cash-flow problems, it’s important that homeowners not ignore the problem, Long Realty’s Johnson said. They also shouldn’t ignore letters or phone calls from their bank, she said.

"Once they start having financial difficulties," she said, "they need to consult a professional about what their options are."

Blogger’s Note: To read more about Long Realty’s Short Sale Resource Group, click here.