Thursday, February 15, 2007

"What's Changed Is That There Are No Buyers"

The Westborough News reports from Massachusetts. "The dramatic rise in foreclosures across Massachusetts in 2006 did not spare Westborough. Driven by plunging housing prices, petitions to foreclose on town properties nearly tripled from 2005, according to a report. The report said mortgage lenders filed 30 foreclosure petitions on Westborough homebuyers in Massachusetts Land Court last year, compared with 11 in 2005. The total number of foreclosures in Worcester County increased 75 percent to 2,987."

"The numbers for the town and county mirrored record-breaking foreclosure figures across the state. Last week Boston-based real estate publisher The Warren Group reported a 70 percent increase in Massachusetts’s foreclosures in 2006. The report attributed the increase in large part to a 6 percent drop in the median price of a single family home."

"Tim Warren, CEO of the Warren Group, said the housing slump had a direct impact on why so many homeowners defaulted on their mortgages. 'The rapidly rising market we’ve had for the last 12 years or so covers up a lot of sins,' Warren said. 'When people lost their jobs or couldn’t make payments, they could refinance and take out the extra equity they needed. Now with prices dropping they can’t do that.'"

"The Warren Group report said although the median price of homes in Westborough rose slightly in 2006, the number of homes sold dropped to its lowest level since 1991. Median sale prices for single family homes in December 2006 were down 14 percent from December 2005."

"Warren said many homeowners’ problems have been compounded by the recent rise in interest rates. The monthly payments for some mortgages signed with low introductory 'teaser rates' are now going up. 'These numbers give a sense of a bad experience for a lot of homebuyers,' Warren said. 'Some people have gotten in too deeply and don’t have enough of a cushion.'"

"Jay Cox, owner of Commonwealth Mortgage Lending in Westborough, said in recent weeks some lenders in the area had stopped giving loans to borrowers with mediocre credit scores. They had also started reducing the number of interest only and no money down mortgages."

"Judith Pfeffer, vice president of Westborough Bank, said while her bank’s lending practices are largely unchanged, the number of people buying houses has dropped noticeably. 'What’s changed is that there are no buyers. It is extremely slow,' Pfeffer said. 'It started in the latter part of last year and has gotten worse in the last month.'"


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