In the first quarter of 2012, city records show, 3,148 single-family houses were sold in Philadelphia. And nearly one-third of the sellers, 902, were lenders, government agencies, and Fannie Mae and Freddie Mac.

That number represents an unprecedented level of distressed-home transactions, even when compared with the previous 24 quarters, stretching back through the housing bust to first-quarter 2006.

The next-highest quarterly number — 451 foreclosure sales — occurred in first-quarter 2010. Eighteen previous quarters saw distressed-sales volumes in the single or low double digits; just seven were recorded in the third quarter of 2011.

Such a large number of distressed sales in this year's first-quarter total surprised Kevin Gillen, vice president at Econsult Corp. in Philadelphia, who was using the data to develop his home-price index.

It suggests several things, Gillen said, most important that "institutions have really stepped up their activity to both foreclose on delinquent borrowers and then to liquidate these foreclosed homes."

"It would seem that they are either really feeling the pressure to get these off the books," Gillen said, "or are feeling comfortable enough about predictions of the market stabilizing that they aren't as worried that releasing this inventory will drive home prices down further."

Not surprised were the people on the front lines, including John Dodds, executive director of the Philadelphia Unemployment Project, which tries to help those without jobs who are facing the loss of their homes.

"My housing counselors say they have seen an uptick," said Dodds. "One of the lender's attorneys told me about a month ago that he saw an increase coming. … It looks like things are building again."

First-quarter foreclosure filings for the Philadelphia metropolitan area were up 33 percent over fourth-quarter 2011 levels, RealtyTrac, which monitors such activity nationwide, reported Thursday.

Gillen noted that "institutional transactions are going for very low prices — many less than $10,000" — and said that he wondered "how much of a contagion effect this will have on existing-home values."

The Trend Multiple Listing Service data that form the basis of Prudential Fox & Roach's HomExpert Market Report show that city sale prices declined about 6.4 percent from the fourth quarter, based on 1,932 reported sales in the first three months of 2012.

The low number of transactions in the MLS compared to those listed by the city's Recorder of Deeds "suggests that, so far, that segment of the market has remained insulated from these institutional liquidations and the price declines are occurring in the already-lower-priced segment of the market," Gillen said.

Looking at the raw data provided to Gillen, if all first-quarter sales were factored in, the city's median price for the period would fall to $22,500, reflecting the number distressed homes that sold for less than $10,000.

In fourth-quarter 2011, the median price was $32,500, but there were only 282 distressed-property sales, all but four of them by lenders.

Most such sales are bank-owned repossessions, because of the freedom to act that lenders apparently have now that they've settled with 49 of the states' attorneys general over questionable foreclosure-processing practices, known widely as robo-signing.

Moody's Analytics chief economist Mark Zandi says the main obstacles to a housing recovery are too many vacant homes and too many loans in the foreclosure pipeline. Lenders appear more eager these days to clear the pipeline, if the city numbers are any indication.

Some of these transactions are short sales, in which the lender accepts less than the borrower owes on the mortgage. Although short sales still take much longer than might be expected, lenders and Fannie Mae and Freddie Mac are more ready to deal — at least sometimes.

"Once a property is scheduled for sheriff's sale, it's very hard to stop once the wheels are in motion," said Ruth Feldman, of Weichert Realtors McCarthy Associates in Philadelphia. "I had a short sale, with a viable offer, but the bank would not consider [it] as they told me the 'file was closed,' and the scheduled sheriff's sale could not be postponed."

Lender wariness of short sales has some basis in fact. David H. Stevens, president and CEO of the Mortgage Bankers Association, said this week that a fraud-trends study conducted by the real estate reporting service CoreLogic in 2011 showed that "distressed sales remain a source of significant risk."

Unrealized recoveries on "suspicious short-sale transactions" may be costing lenders as much as $375 million per year, Stevens said.

"Unscrupulous investors, unethical real estate agents, and other fraudulent-loan actors in the mortgage-application process," he said, "are targeting distressed borrowers and arranging same-day flips through the foreclosure and short-sale processes."

Philadelphia Common Pleas Court's Mortgage Foreclosure Diversion Program, which brings borrowers and lenders together in a courtroom setting to work out financial settlements, has thus far saved 5,000 homeowners from foreclosure. Efforts to limit the process to 150 days instead of the current open-ended arrangement have been abandoned by the court.

February's national settlement between the attorneys general and five major lenders has provided the states with millions of dollars designated to avert still more foreclosures.

Pennsylvania received close to $69 million from the settlement, and Dodds and other activists are hoping that some of the money will be used to resurrect a successful bridge-loan program for the unemployed, the Home Emergency Mortgage Assistance Program, administered by the state Housing Finance Agency.

Since it began in 1983, the program has saved 46,000 homeowners from foreclosure, and the loans repaid exceeded the total lent. No money for the program was included in the 2011 and 2012 state budgets.

Dodds said a statewide coalition had recommended that $20 million a year for three years from the state's settlement would adequately finance the program.

Contact Alan J. Heavens at 215-854-2472 or, or follow on Twitter @alheavens.