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Fewer foreclosures will help economy

A foreclosure sign is seen in front of a house on 16th Street NW in Washington on August 22, 2010. More than 2.3 million homes have fallen into foreclosure since the recession began in later 2007, according to RealtyTrac Inc. Economists expect the number of foreclosures to grow into 2011. UPI/Kevin Dietsch
A foreclosure sign is seen in front of a house on 16th Street NW in Washington on August 22, 2010. More than 2.3 million homes have fallen into foreclosure since the recession began in later 2007, according to RealtyTrac Inc. Economists expect the number of foreclosures to grow into 2011. UPI/Kevin Dietsch | License Photo

PHOENIX, Jan. 9 (UPI) -- Reducing the number of foreclosures will help stabilize the U.S. housing market and help patch one of the economy's most troubled sectors, officials said.

One state that is seeing fewer foreclosures is Arizona, The New York Times reported Sunday.

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One reason for the reduction in foreclosures, which helps the market because it removes excess inventory, is the array of federal and state investigations into the way banks foreclose on delinquent homeowners, the report said.

The Obama administration said foreclosure activity fell 21 percent in November from October, the biggest monthly decline in five years. In Phoenix, foreclosures dropped by more than 33 percent for the same period.

"There's no product, just nothing to buy," complained Sean Waak, an agent for investors, during a recent auction outside the courthouse in Phoenix.

The additional scrutiny lenders face regarding foreclosing on delinquent homeowners also slows the number of homes on the market at any one time.

"Anything that buys time, that reduces the supply of houses coming onto the market, is helpful," said Karl Guntermann, a professor of real estate finance at Arizona State University.

Foreclosures started dropping in late September when some lenders were found to be starting foreclosure proceedings without verifying the data in the loans, the newspaper said.

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