Foreclosure filings in Mass. jump 66%
Trend in higher rate of notices expected to extend through '07
Foreclosure filings in Massachusetts increased 66 percent in the second quarter, according to data released yesterday, a trend that is expected to continue over the next year.
Mortgage lenders filed 4,292 notices of foreclosure against homeowners during the second quarter, up from 2,585 a year earlier, according to ForeclosuresMass Corp., which compiles the data from Massachusetts Land Court. That 66 percent surge in filings compares with a 30 percent rise in first-quarter filings.
The state's rate of past-due mortgages -- the number of homeowners more than 30 days behind in their payments, as a percent of total mortgages -- is 3 percent, compared with 4 percent nationwide, according to the Mortgage Bankers Association. Lenders have filed for foreclosure on 0.6 percent of Massachusetts mortgages, below the 1 percent national rate.
But, Jeremy Shapiro, the president of ForeclosuresMass, said he was alarmed about the pace of Massachusetts' sharp recent increases.
``The foreclosures in Massachusetts right now are skyrocketing," he said. ``This is a problem that's going to extend through 2007 and 2008."
Kevin Cuff, the executive director of the Massachusetts Mortgage Bankers Association, said these are ``big increases." However, the total number of mortgage loans also has ballooned. For example, just 315,000 mortgages were extended to Massachusetts homeowners in 2000. By 2002, loans had doubled and hit a record 870,000 in 2003.
Lending activity has slowed recently, to 535,000 mortgages in 2005.
It ``would seem logical" that the total number of foreclosures statewide would rise, Cuff said, because there are more total loans outstanding.
Foreclosure filings do not mean the imminent loss of property for a homeowner. Once they receive notice from a bank or mortgage company, homeowners may be able to work out a refinancing plan with their financial institution or sell the home and pay off the loan, averting foreclosure.
That strategy is increasingly difficult, because home sales are down sharply from a year ago, particularly in the suburbs. The strategy may be impossible for homeowners with little equity in their homes or homes that have declining value.
Sharpiro and Cuff both cited the popularity of adjustable-rate mortgages as a cause of homeowners' financial problems.
Those who stretched to buy high-priced homes with these loans, which offer lower rates than 30-year, fixed-rate mortgages, now face payment increases as the interest rates mover higher.
Adjustable-rate loans are ``a big driver now and will be more so going forward," Shapiro said.
On Cape Cod, for instance, owners of second homes with adjustable-rate loans pay more per month, yet a weakening market for vacation rentals has reduced the income they rely on to pay their mortgages, Shapiro said.
Over the past two years, Barnstable County has experienced the biggest surge in filings -- 129 percent, or more than double -- to 401 in the first six months of 2006. The statewide increase was 88 percent. Foreclosures in the first half also more than doubled in Plymouth County ( 926 filings), Suffolk County, which includes Boston ( 853 filings), and Bristol County ( 779 filings.)
Shapiro said second-quarter filings are typically less than the first-quarter, when holiday bills, taxes and other obligations that come due can strain household finances.
His firm's data show 2006 year is shaping up differently: 3,762 filings in the first quarter and 4,292 in the most recent period.
Kimberly Blanton can be reached at email@example.com.