Massachusetts Foreclosed Homes

Massachusetts Foreclosure Activity Jumps March 2012

Lenders filed 1,621 petitions to foreclose in March in Massachusetts, a 54.7 percent increase from 1,048 in March 2011, The Warren Group, publisher of Banker & Tradesman, reported April 26, 2012.

A total of 4,348 petitions to foreclose have been filed in Massachusetts during the first quarter, a 71.5 percent increase from 2,535 in the first quarter of last year. Petitions to foreclose represent the first step in the foreclosure process in Massachusetts.

One of the reasons for the dramatic gains is that foreclosure activity was significantly slower in 2011. A national foreclosure suit against lenders coupled with a new law extending the right-to-cure period to 150 days caused for a major slowdown in foreclosure activity.

Banks now appear focused on clearing out inventory. Foreclosure activity may continue to rise throughout the year. It should be noted that depite the increases in activity, foreclosures are below the highs of a few years ago.

Foreclosure deeds, which represent finished foreclosures, also sharply increased in March. Foreclosure deeds rose 36.5 percent to 856 in March, up from 627 in March 2011. Foreclosure deeds totaled 2,254 in the first quarter of 2012, a 34.4 percent increase from 1,677 in the first quarter of 2011.

The number of auction announcements tracked by The Warren Group fell in March compared to a year earlier. There were 1,214 auction announcements in March, a 3 percent decrease from 1,254 announcements during the same month last year. In the first three months of the year, there were 4,174 auction announcements, up 26.7 percent from 3,293 during the same period in 2011.

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Will Massachusetts Short Sales Get Quicker?

The Federal Housing Finance Agency (FHFA) is directing Fannie Mae and Freddie Mac to streamline their short sale timelines in order to help more homeowners avoid foreclosure, according to a press release issued by McGeough and Lamacchia, which is a real estate brokerage specializing in short sales.

The firm believes these improvements in communication timelines between servicers and borrowers will significantly improve the short sale process.

In a news release dated April 17, 2012, the FHFA outlines new requirements for short sales including the requirement that mortgage servicers review and respond to requests for short sales within 30 days from receipt of a short sale offer.

In the past, lenders have been slow to responding to short sale offers which has frustrated both home buyers and distressed homeowners. Home buyers will now get a quick response when they make an offer on a short sale home, and distressed homeowners will be able to move out of their homes into more affordable housing sooner and avoid foreclosure.

There’s been a lot of pressure recently for banks to improve response times for short sales. In February of this year, Senators Lisa Murkowski (R-AK), Scott Brown (R-MA), and Sherrod Brown (D-OH) introduced a bill, the "Prompt Notification of Short Sale Act," which requires mortgage lenders to make a prompt decision on whether to allow a short sale at the request of a home buyer. The bill is currently awaiting referral to committee.

These new communication timelines apply to both Home Affordable Foreclosure Alternative (HAFA) short sales and regular short sales. They do not guarantee more HAFA short sale approvals, however. HAFA short sales are available for mortgages that are owned or guaranteed by Fannie Mae and Freddie Mac. McGeough Lamacchia Realty says the problem is Fannie Mae and Freddie Mac have been resistant to approving HAFA short sales. McGeough Lamacchia Realty believes that while the guidelines may not increase HAFA short sale approvals, they are a step in the right direction in making short sales easier and will help more people avoid foreclosure.

Short sales are better than foreclosures for distressed homeowners, banks, and communities. Distressed homeowners can transition from a home they can no longer afford more easily through a short sale. Short sales are better for banks because they yield more revenue for banks than foreclosures. Short sales are also better for communities. The homes stay occupied since they go from homeowner to homeowner, and the average selling price for a short sale home is higher than for a foreclosed home, which helps stabilize the neighborhood’s home values.

According to the new guidelines, loan servicers will now be required to provide weekly status updates to the borrower if the short sale offer is still under review after 30 calendar days; review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer and a complete borrower response package; make and communicate final decisions to the borrower within 60 calendar days of receipt of the offer and complete borrower response package.

The new guidelines will go into effect for new short sale evaluations conducted on or after June 15, 2012, but servicers are encouraged to implement these guidelines sooner.

Nearly Half of Foreclosures, Repeat Foreclosures

With a 28 percent increase in U.S. foreclosure starts this past January compared to December 2011, nearly 50 percent of the 230,000-plus loans entering the foreclosure process were repeat foreclosures, reported CNBC, March 6, 2012.

Repeat foreclosures, which are either failed loan modifications, or loans that banks attempted to modify but could not, reached an all-time high accounting for 47 percent of all foreclosure starts in the month of January. “Banks are modifying loans more aggressively now, but many of these mortgages simply cannot be saved, and the sooner they are processed and new buyers are found for the properties, the sooner overall home prices can recover,” CNBC reported.

There are more than 4 million delinquent homes that have sat untouched by banks. Many of the properties have remained delinquent for more than two years. Some of those loans are being worked through modifications as banks become more aggressive with their modification process, but most are finally entering the foreclosure process.

Massachusetts Auction Announcements Up January 2012

The Warren Group, publisher of Banker & Tradesman, reported last week an increase in real estate auction announcements in January. A total of 1,512 auction announcements were tracked in January, a 31 percent increase from 1,150 during the same month the previous year.

Banks buy back the vast majority of properties at auction.

Massachusetts Foreclosures Surge in January 2012

Massachusetts foreclosure activity spiked in January, posting double digit increases in both foreclosures initiated and completed foreclosures, The Warren Group, publisher of Banker & Tradesman, reported March 1, 2012.

The number of foreclosure petitions statewide increased more than 68 percent, rising to 1,333 from 793 in January 2011. Foreclosure petitions, which mark the first step in the foreclosure process in Massachusetts, had declined in all but two months in 2011.

Foreclosure activity slowed throughout much of 2011 as banks worked through legal and documentation issues. By contrast, 1,873 and 1,960 foreclosure petitions were filed in January 2010 and 2009, respectively. Foreclosure petitions in January rose in every county in Massachusetts. January petitions were 32 percent higher than the number filed in December and were at the highest level since August 2011.

In January, there were 662 foreclosure deeds filed statewide, a 25 percent increase from 529 deeds recorded in January 2011. Foreclosure deeds represent completed foreclosures. This is the fewest number of deeds statewide since May, when 571 foreclosures were completed.