Foreclosures up on fixed-rate loans
High unemployment is hitting home — literally — in the Merrimack Valley’s largest communities.
More long-term homeowners with “good’’ fixed-rate mortgages are facing foreclosure, likely because of job losses, according to a University of Massachusetts Lowell researcher.
The financial industry appears to have worked through much of the “bad’’ adjustable-rate mortgages from the housing bubble, many from predatory lenders, said researcher and writer Keith Vaillancourt of the university’s Center for Family, Work and Community. But a closer look at property records finds growing numbers of default notices and actual foreclosures on people who have owned their homes for a decade or even longer and have reasonable mortgage terms, he said.
“The big killer in this is unemployment or underemployment,’’ Vaillancourt said.
Housing specialists in Lawrence and Lowell agree.
“We are seeing 50 to 60 percent of our clients with traditional fixed-rate mortgages, where a year or two ago it was 95 percent with adjustable mortgages,’’ said Juan Bonilla, director of homeownership education for Lawrence Community Works.
The Community Works’ active caseload for mortgage delinquency services and counseling is close to 300 families, Bonilla said.
“We’ve been seeing families affected more and more by the poor job market, families losing income due to job loss or hours being cut or overtime being cut,’’ Bonilla said. “In some cases, families purchase their home with two jobs, it was the only way they could afford to purchase a home . . . and they’ve lost one of those jobs. It’s a vicious cycle going on.’’
A computer scan of the first 100 foreclosure cases this year at the Home Preservation Center run by Lowell’s Coalition for a Better Acre showed more than 80 percent involve a fixed-rate loan under 8 percent, said coalition executive di rector Emily Rosenbaum.
“On paper, you’d say what’s the problem?’’ Rosenbaum said. “But when you scan over to the reason they’re coming to the center, it’s all reduction of income, reduction of income, reduction of income.
“One gentleman we helped recently was a contractor who had his own construction company who had to close it due to lack of business. Now he works at Lowe’s,’’ said Rosenbaum. “He was in his mid-50s. We were able to get him a loan modification; he’s going to be OK, he saved his home. But he had to make some dramatic lifestyle changes.’’
The trend began as much as a year or more ago but has accelerated lately, in part due to the end of temporary jobs with the US Census as well as the ongoing economic trouble, said Ana Camargo of the Lawrence Community Development Department Homeowner Project.
Many of the people involved “were just at the cusp, they were just making ends meet,’’ Camargo said.
Writing in the Merrimack Valley Housing Report, Vaillancourt reported that pending orders of notice and actual foreclosures are up over 2009 in Haverhill, Lawrence, Lowell, and Methuen, sometimes more than double. Even suburban Dracut showed large increases. Only Lawrence stayed level in actual foreclosure deeds.
There are some encouraging notes: Orders of notice have dropped slightly from month-to-month through the first five months of this year, Vaillancourt said.
Haverhill’s May numbers for both orders and foreclosures went down. And suburban communities are generally recovering better than larger, more urban ones.
“Another good thing is we’ve been seeing moderate and steady increases in median housing value for those who have held onto their homes,’’ said Vaillancourt.
But those bright spots are surrounded by a lot of ongoing bad news.
Because of foreclosures, Vaillancourt said, those larger communities have growing amounts of “real estate-owned’’ properties — those held by banks or other lenders, generally after foreclosure. Such properties tend to stay vacant, fall into disrepair, and lose value, all of which makes them a drag on their neighborhoods, he said. And government loan-modification programs have for various reasons failed to help many homeowners in trouble.
That’s why groups like Bonilla’s are intent on working with homeowners before they get in trouble, counseling buyers at the beginning of the process. “One of the things we strive to do is help families become successful homeowners,’’ Bonilla said.
“Foreclosure is a very difficult challenge for any family, whether you had a good loan or not. It’s disastrous,’’ Bonilla said. “You’re talking about your home, the place you live, your shelter. When that’s at risk, panic sets in. . . . For any family, when you’ve fought so hard to get into a home of your own and now somebody is trying to snatch it away from you, it’s a very difficult thing to deal with.’’
Joel Brown Boston Globe July 15, 2010