Monday, May 2, 2011

MORTGAGE & FINANCE: Mass. foreclosures see steep drop over last year

The number of foreclosures in Massachusetts dropped again last month as an improving economy and a slowdown in the home-seizure process kept more struggling owners in their houses, new data showed yesterday.
Foreclosure petitions, the first step in a residential property-taking, dropped to 1,048 in March, about 60 percent fewer than during the same month last year, according to Warren Group, a Boston company that tracks local real estate.
Foreclosure deeds, the last step in the process, decreased by 60.3 percent in March, to 552, compared to the same month in 2010, according to Warren Group.
David Turcotte, a research professor in the economics department at the University of Massachusetts Lowell, said factors causing the foreclosure slowdown include a brightening economic outlook and a new state law that extended the waiting period from 90 to 150 days before lenders can start foreclosure proceedings. But he does not expect a long-term lull.
“In talking to attorneys that represent lenders, they anticipate foreclosures will jump back again over the next few months,’’ Turcotte said.
“While extending the time for lenders to foreclose makes sense, it is delaying the inevitable in many cases.’’
Many US lenders temporarily stopped or dramatically slowed foreclosures last year following allegations of sloppy and fraudulent practices.
In addition, homeowners in Massachusetts also have been aided by the economy: The unemployment rate dropped to 8.0 percent in March, compared with 8.7 percent during the same month in 2010, according to the latest data.
And a small but growing number of homeowners are receiving assistance from lenders through loan modifications that reduce their mortgage payments. Since 2009, nearly 14,000 Massachusetts homeowners have received permanent loan modifications through the federal government-sponsored Home Affordable Modification Program, according to the latest data.
In Chelsea, a city hard hit by foreclosures, community organizer Eliza Parad said many of her clients are still trying to save their homes, handicapped by unemployment and cuts in their wages. Still, she said some have managed to postpone or stop a foreclosure through loan modifications or legal challenges. “People have found some solutions,’’ Parad said.
But Timothy M. Warren Jr., chief executive of Warren Group, said the housing market has not improved enough to indicate that the foreclosure crisis will fade any time soon. Adding to concern, both foreclosure deeds and petitions increased in March compared with February, he said. Petitions alone surged 50 percent over the one-month period, data showed.
“There are likely more foreclosures in the pipeline, which will come to the surface in coming months,’’ Warren said.
Jenifer B. McKim Boston Globe April 21, 2011

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