Drop in Mass. foreclosures tied to fewer seizures
The number of home foreclosures in Massachusetts plunged in January, largely because lenders slowed the process of seizing properties following increased scrutiny over shoddy paperwork, housing specialists said.
Foreclosure petitions, the first step in the process, dropped statewide by nearly 58 percent in January, to 793, compared with the same month last year, according to data released yesterday by Warren Group, a Boston company that tracks local real estate data.
Completed foreclosures declined by about 59 percent in January, to 468,compared with the corresponding period last year, Warren Group said.
But Vincent M. Valvo, editor of Warren Group’s publication Banker & Tradesman, said the steep drop probably doesn’t mean large numbers of homeowners in financial distress are doing better. “Unfortunately, it’s more likely that the reduction is caused by lenders slowing their processes than improved financial stability among homeowners,’’ Valvo said.
Many major US lenders including Bank of America Corp. and JPMorgan Chase & Co. extended or temporarily stopped foreclosure procedures last fall after reports that some employees were signing thousands of legal documents a week without actually reading the paperwork. Adding to banking concerns, US attorneys general in all 50 states in October launched an investigation into foreclosure practices. That investigation is ongoing.
This week, HSBC Holdings PLC, a financial services company based in London, became the latest lender to say it would hold off on foreclosures in the United States. HSBC said in its annual report that it stopped foreclosures in reaction to criticism from the US Office of the Comptroller of the Currency and the Federal Reserve Board, which are also examining foreclosure procedures nationwide. Problems were found in the company’s “processing, preparation and signing of affidavits,’’ among other areas, the report said.
“We have suspended foreclosures until such time as we have substantially addressed the noted deficiencies in our processes,’’ the company’s report said.
Because of the widespread foreclosure suspensions and slowdowns, many homeowners are in limbo, fighting to keep their homes while seeking loan modifications that can take months to finalize, said Dave Burt, an organizer with the housing advocate group City Life/Vida Urbana, based in Jamaica Plain.
“There are a lot of people that have been able to fight off their foreclosure for a while and they are hanging in an in-between state,’’ he said.
Nadine Cohen, a managing attorney with the nonprofit Greater Boston Legal Services — which provides assistance to low-income clients — said the improving numbers may give borrowers fighting foreclosure some reason for optimism.
“My hope is that banks are seeing that foreclosing and having these vacant properties on their books is not helping them or the economy,’’ Cohen said.
Kathleen C. Engel, a Suffolk University Law School professor and coauthor of “The Subprime Virus,’’ said lenders may be delaying foreclosures in hopes of selling seized properties at higher prices later this year if the real estate market rebounds. They could also be reluctant to assume responsibility for properties during the winter season, she said.
“They are waiting for the snow to get off the ground,’’ Engel said.
Jenifer B. McKim can be reached at firstname.lastname@example.org.