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Globe Editorial

A foreclosure virus spreads

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February 15, 2008

THE MOST powerful agencies in city government descended on Hendry Street in Dorchester yesterday hoping to contain a virus of foreclosures. But by the time the mayor, police commissioner, and housing inspectors had arrived, it appeared that urban rigor mortis had already set in.

About a dozen properties in foreclosure line Hendry, Coleman, and Clarkson streets in a low-income neighborhood that the Menino administration has targeted for public safety, recreation, and economic development improvements over the past five years. Standing outside a boarded-up three-decker at 17 Hendry St. - one in a long string of abutting properties in the same straits - Mayor Menino vowed that he would restore value to the neighborhood, even if it required the city to redevelop the properties itself. But such a strategy can work only if the city can seize a property for tax delinquency. Most of the blighted houses in the Hendry Street area, however, don't owe back taxes. Redeeming these properties requires a more aggressive approach.

Menino often saturates a high-crime area with massive resources. Sometimes, the troops withdraw not long after the departure of the TV crews. But there are signs that the mayor is deadly serious about his new "foreclosure intervention team." William Sinnott, the city's chief attorney, is investigating whether state banking officials could freeze the assets or strip the licenses of mortgage lenders who snub efforts to bring the properties up to code or resist putting them back on the market quickly. City officials also hope to work more closely with the state attorney general to uncover if investor fraud or other criminal activity might be at play.

More than 700 properties in Boston fell into foreclosure last year, mostly products of a subprime mortgage market that lured financially unstable buyers with low introductory rates. Unfortunately, the time has passed for debating whether venal mortgage brokers or gullible buyers are to blame. City officials expect about 2,000 homeowners to face sharp increases in the cost of their subprime mortgages between now and the end of next year. That creates the potential for many more Hendry Streets to come.

City officials say they are getting decent cooperation from major mortgage servicers in the area, such as Wells Fargo. But they also say they are struggling to make contact with their subsidiaries, such as the Iowa-based America's Servicing Co. It will require much persistence to peel back this smelly onion.

Sloppy mortgage programs in the 1960s also led to a rash of foreclosures in Dorchester. City government looked away. It took decades to restore the properties and redeem the neighborhoods. Menino, at least, knows this history and understands how a repeat could ruin his city and his legacy.

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