The Foreclosure Report

"The Trend Is Accelerating": Massachusetts

The Republican reports from Massachusetts. "Indicators of delinquent mortgage payments that could lead to foreclosure rose dramatically in Massachusetts in February, according to a report issued yesterday. The first step taken by a lender against a delinquent borrower, petitions to foreclose filed in state Land Court, rose 92.1 percent to 2,242 across the state compared to the number of petitions filed in February last year, according to The Warren Group."

"Advertisements for foreclosure auctions, the last step before a property is actually sold at auction, rose an alarming 199 percent to 1,005 statewide compared to the year before, according to the report."

"Terence F. Egan, editor at The Warren Group, said the 'trend is accelerating.' Month-over-month comparisons throughout 2006 and into 2007 have shown steady increases, he said. 'It's likely to get worse before it gets better,' he said."

"Petitions to foreclose in Hampshire County rose 177.8 percent, from 9 to 25; in Franklin County, petitions were up 122.2 percent, from 9 to 20; and in Hampden County, petitions were up 101 percent, from 99 to 199."

"Egan said 'what's really interesting' is that foreclosure petitions in the Pioneer Valley are tracking the increases across the state, but the increase in auction announcements is 'dramatically lower' than the rest of the state. That may be because housing prices are lower in Western Massachusetts and did not spike as high as eastern Massachusetts housing prices during the boom years."

"Also, he said, homeowners may find it easier to sell their homes than eastern Massachusetts homeowners, who have watched housing values slide. 'There's not a lot of wiggle room when you owe more on your home than you can sell it for,' Egan said."

From News Center 5. "NewsCenter 5's Amalia Barreda reported that the numbers mean that in just about any neighborhood in any Massachusetts town, homeowners could be on the brink of losing their most important financial investment. Mortgage broker Don Larsen had to break the bad news to his client on Wednesday. New Century Mortgage, a wholesale lender, did not have the cash for a promised $417,000 loan."

"'They've always said everything was fine. Keep sending loans in, everything will fund. Unfortunately, this one didn't fund, and it makes me look bad and makes my borrower unhappy,' Larsen said."

"Foreclosure loomed for Barbara Gosselin and her husband recently. A risky zero percent down payment loan helped them become first time buyers of a property in New Hampshire. But tight finances got tighter when her husband had unexpected business problems."

"'The stress has been unbelievable. I've had days where I've cried. At work I've cried trying to do my job and just worrying about the stress of losing the home,' Gosselin said."

From CNN Money. "Jemima and Ricardo Sanon saw the possibility of trouble before they ever signed their mortgage documents in 2004. The Sanons had diligently saved $5,000 in preparation to buy their first home, but the sum was just enough to cover the closing costs. So to finance the $290,000 purchase price of a Waltham, Mass home, they took one loan for $232,000 and also a piggyback loan for $58,000, both from New Century Financial, a subprime lender."

"'I worried about how we would make payments when they increased,' said Jemima. 'The mortgage broker [at New Century] told us we could refinance.'"

"Fast forward a couple of years, and the Sanons, like so many other subprime borrowers today, are struggling to keep their heads above water. As the housing market boomed, refinancing or selling your home was a simple solution for borrowers who had trouble making the mortgage payment. Now that the housing market has stalled, subprime borrowers are stuck with loans they really couldn't afford in the first place."

"Defaults and foreclosures are rising, and the industry is roiling as lenders face the consequences after years of handing out money irresponsibly. Says Bruce Marks, CEO of a non-profit that is trying to help the Sanons and other subprime borrowers refinance into sensible mortgages: 'Lenders knew these loans were structured to fail.'"

"For the Sanons, the initial monthly payment on the larger loan was some $1,300. Two years later, that payment jumped to over $1,800. As a result of the sticker shock, the couple fell behind on their credit cards and student loans."

"In November, Jemima had to leave her job for several months because of a difficult pregnancy, which put them even further behind on the bills. She recently returned to work. But not in time to stay current with the mortgage; in February, the Sanons paid late. Now the March payments are due, and the latest adjustment has pushed the sum on the larger loan to over $2,000."

"After the first adjustment, Ricardo called Litton Loan Servicing (the company currently servicing the mortgage) to try to work something out. 'They threatened us,' he says. 'They said, 'If you don't make your payment, we'll foreclose.'"

"Ricardo's working with Marks' organization to try to get into a loan that makes sense. In the meantime, he has been logging seven days a week at the drug store where he is employed as an assistant manager to keep up with the house payment. With their newly blemished credit record, the couple hasn't yet been able to refinance out."

"'We want to keep our house,' says Jemima. 'But we can't do it with the mortgage we have right now.'"

posted by Ben Jones @ 12:46 PM