engfant

Begining of the end.

Foreclosure filings jump in Mass. as home values soar
By Kimberly Blanton, Globe Staff | June 18, 2005

The combination of high housing prices, low interest rates, a sluggish job market, and new mortgage products that allow borrowers to stretch their finances to pay for their homes has contributed to a nearly 28 percent surge this year in foreclosure filings across Massachusetts.

The spike in homeowners being taken to court for falling behind in their mortgage payments is one of the results of the 50 percent increase in Massachusetts home prices between 2000 and 2003 -- a bigger rise than in any other state. In 2004, the median sales price for a single-family home in Boston was $387,400, more than double the US median.

Because of high housing prices, many first-time homebuyers have been using new, risky mortgage products that hold down costs in the early years of a loan, but they can face difficulties if payments rise later. In addition, people who already own homes have been tapping into rising property values to borrow money at historically low interest rates for college tuition, home improvements, credit-card debt, or other financial needs.

Across the country, mortgage debt is growing dramatically, according to Federal Reserve data. Americans took on $904 billion in mortgage debt last year, $276 billion more than two years ago. Nationally, the number of homeowners who have fallen behind in their mortgage payments and face potential foreclosure fell slightly during the first quarter of 2005.

But in Massachusetts, the number of foreclosure filings rose 27.8 percent, to 3,740, in the first four months of the year, compared to 2,926 in the same period last year. The largest jump, 49.8 percent, to 367 foreclosures, took place in Suffolk County. In Essex County, which includes Lawrence, Salem, Gloucester, and Newburyport, foreclosure filings rose 40.6 percent, to 440. The data was compiled by ForeclosuresMass Corp., a company that collects information from the state's Land Court, where most of the foreclosure actions against mortgage holders are filed by lenders.

''When you tie all these factors together -- the bubble in the real estate market, the popularity of interest-only loans, the willingness of lenders to give loans without a significant down payment, the lowering of standards for lenders, and the deep desire of people to own something priced beyond their means -- you have a recipe for disaster," said Secretary of State William F. Galvin, whose office oversees the registries of deeds in a majority of the state's 14 counties. ''That's what you're seeing in the Land Court."

Once a homeowner is 90 days late on mortgage payments, the lender goes to court to begin taking possession of the property. Foreclosure filings in Land Court do not mean a homeowner is in imminent danger of losing his house. About two-thirds are never foreclosed on, either negotiating a repayment program or preempting seizure by selling the house and paying off the loan.


http://www.boston.com/news/local/massachusetts/articles/2005/06/18/foreclosure_filings_jump_in_mass_as_home _values_soar/

DWhite6872

This is not news...the new home builders knew what they were doing...we had some of our tenants get approved for a house, and my only thought was....they will be back.

I think it is sad what they have done to a bunch of people, signing them up for interest only loans for 3 years ....and they know when they go for traditional financing their debt ratios will be different and they will not be able to refinance their home...so they get it back.