Monday, December 05, 2005

'National Lending Explosion' Eyed In MA Defaults

The Sentinel and Enterprise has this report on foreclosures in Massachusetts. "David Anderson has seen his share of families facing trouble with late bills and expensive mortgages, as a counselor for people about to lose their homes. But lately Anderson, got a surprise, a big jump in foreclosures in the area."

"'It used to be that people in foreclosures find themselves in a catastrophic situation, something medical or a losing a job,' Anderson said. 'But it seems to be now I get a lot of desperate calls from first-time homeowners who have done a 20-80 mortgage or a zero interest mortgage, what some would call predatory lending.'"

"Homeowners across the state are losing their homes at a growing rate, forcing lawmakers to face a hard reality on Beacon Hill, the state's economy is far from a healthy recovery. The number of foreclosures in Massachusetts has increased by more than 33 percent in the past year."

"By this time last year, Fitchburg had 64 foreclosures compared to 106 so far in 2005. The rate in some smaller communities, such as Lunenburg, have doubled, with a jump from 14 to 28 foreclosures in one year. Anderson said he has already received 33 calls just since July from families about to lose their homes in northern Worcester County."

"Bob Forrant, a professor at UMass Lowell, said foreclosures are on the rise because high real estate prices and loose mortgage requirements clashed with a lack of well-paying jobs in the state. 'The state is not generating enough well-paying work ... and people have been buying more house than they can afford,' he said."

"William Wheaton, an economist and professor at the Massachusetts Institute of Technology in Cambridge, said the spike in foreclosures is 'not an economy thing.' 'The economy is improving, not very dramatically, but we are on a recovery,' Wheaton said. Wheaton blames the national lending explosion, where more people than ever before had been able to qualify for a mortgage."

"'It used to be that you had to have good credit to get a mortgage, but now no matter who you are, you can get a mortgage,' he said. 'You get a huge number of young people able to buy homes, but they are at a very high risk (of defaulting on loans) the foreclosure rates there will be very high. It won't be getting any better for awhile.'"


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