Foreclosures in Massachusetts fell 29 percent during the first half of 2009 compared to a year earlier, according to the latest report from The Warren Group, publisher of Banker & Tradesman. But petitions to foreclose, the first step in the foreclosure process, rose 5.6 percent during the first six months of 2009 from the same period last year.

There were 4,737 foreclosure deeds from January through June, a 29.4 percent drop from 6,707 during the same months in 2008. In June, foreclosure deeds plunged 45.1 percent to 621 from 1,131 in June 2008 but climbed 6.7 percent from 582 in May. Foreclosure deeds are the final step in the foreclosure process.

"Even though the number of foreclosure deeds has declined from a year ago, they crept up from the prior month, and we’re seeing more people in the initial stage of foreclosure. That’s troubling," said Timothy M. Warren Jr., CEO of The Warren Group. "There are many incentives for lenders to complete loan modifications to help homeowners who can’t afford their current mortgage payments. But researchers have questioned whether these loan modifications are really sufficient to help homeowners."

Warren added, "One area that remains a serious concern is unemployment. Many homeowners who lose their jobs won’t be able to make mortgage payments and pay off other bills even with a loan modification."

While foreclosure deeds have declined year-over-year, the number of petitions to foreclose has increased. Lenders filed 13,813 petitions to foreclose during the first six months of 2009, up 5.6 percent from 13,076 last year. June’s foreclosure petitions jumped to 2,835, more than eight times higher than the 350 petitions in June 2008 and 21.7 percent higher than the 2,329 filings in May. The number of petitions to foreclose in June was the highest it’s been in the previous 13 months.

"June’s foreclosure petitions were close to the historical highs we saw in the early part of 2008," Warren said. "We saw a big drop-off in foreclosure petitions in the middle of last year after the state passed a law requiring lenders intending to start foreclosure proceedings to give defaulting borrowers 90 days to catch up with missed payments. But in subsequent months, petitions to foreclose mounted."

The Warren Group tracked 7,322 auction notices in the first half of the year, nearly 31 percent fewer than the 10,580 auction notices during the same period in 2008. Auction notices in June dropped 10.2 percent to 1,494 from 1,664 last June. But the number of auction notices increased 8.4 percent from May’s 1,378 auction notices.