Mass. Foreclosures Up Nearly 27 Percent

Originally published in The Boston Globe

October 22, 2010
Jennifer McKim (Reporter, The Boston Globe)

Foreclosures in Massachusetts kept climbing in September as 890 homeowners lost their properties, a 26.6 percent increase compared with the same month last year, according to data released yesterday by Warren Group, a Boston company that tracks local real estate.

So far this year, 10,777 properties have been foreclosed on statewide, a 58.6 percent increase from the 6,796 recorded during the same period last year and more than all the foreclosures recorded in 2009, Warren Group said.

The numbers come amid growing concern that some major national lenders have been improperly conducting foreclosures in an effort to speed up the process and evict delinquent owners. Attorneys general from across the country recently said they are examining foreclosure practices, and the US Senate has scheduled a hearing next month on how foreclosures are conducted.

At the same time, economists, community officials, and housing advocates worry that the high number of foreclosed properties in particular markets is affecting not only individual families but entire neighborhoods. Parag Pathak, a Massachusetts Institute of Technology economist, said a foreclosure can make it difficult for other homeowners to sell their properties, leading to even more homes being seized.

"Not only is a significant fraction of housing wealth being destroyed from the foreclosure process itself, but the glut of properties on the housing market as a result of foreclosures is driving down prices overall," Pathak said.

That remains a concern in areas such as the North Shore city of Lynn, which has been particularly hard hit by foreclosures and the resulting abandoned buildings. There have been 254 homes lost to foreclosure this year in Lynn, according to Warren Group, a nearly 15 percent increase from the same period in 2009.

Isaac Simon Hodes, a volunteer organizer for the community group Lynn United for Change, said activists are looking for ways to help residents stay in their homes even after foreclosure.

"People in communities are desperate to find their way out of the negative spiral you see when foreclosures continue to climb," Hodes said. "It is still at a crisis level in Lynn."

But some of the September foreclosure data gave housing specialists reason for hope. Foreclosure deeds, while up compared with the same time last year, were down from 1,207 foreclosures in August. There were 3,344 homes taken back by lenders during the quarter — fewer than the number in either the first or second quarter of 2010, Warren Group said.

And the number of foreclosure petitions — the first step in the process — dropped in September when compared with the same time last year. Homeowners received 2,358 foreclosure petitions last month, a 6.7 percent decrease from 2,527 in September 2009. There have been nearly 21,000 foreclosure petitions filed since the beginning of the year, about 3 percent fewer than the same period a year ago.

Timothy M. Warren Jr., chief executive of Warren Group, warned that improving numbers do not indicate the foreclosure crisis will end any time soon. But, he said, "With any luck, the number of people entering foreclosure will continue to moderate."

Edward Glaeser, a Harvard University economist, agreed there is a long way to go before foreclosures are no longer a serious issue, partly because lenders are not sufficiently motivated to help struggling borrowers modify their loans to more affordable rates. "This is a long, slow slog," he said. "It will keep on being painful."