Massachusetts Foreclosed Homes

Foreclosure And Price Declines

The Warren Group reported that the median price for single-family homes dropped 5.8 percent from $313,000 in November 2006 to $295,000 in November 2007. The year-to-date median price for single-family homes fell 4.7 percent from $327,000 last year to $311,705 this year.

Because of the rapidly rising rate of foreclosures, The Warren Group has decided to also calculate data that excludes the effects of foreclosures deeds. Using this method, the median price of single-family homes has stayed nearly steady year-to-date, falling less than a half percent from $335,000 last year to $334,900 this year. November’s median price, when calculated with this method, fell just 1.6 percent from $325,000 to $319,900.

Federal Reserve Proposes New Loan Rules

In a 5-0 vote, the Federal Reserve moved to propose new mortgage loan rules in an effort to protect home buyers from ethically challenged mortgage brokers and others in the lending industry, the Boston Herald reported December 18, 2007.

The proposed rules would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower’s income.

The new rules also would prohibit lenders from lending without considering a borrower’s ability to repay a home loan from sources other than the home’s value.

Makes you wonder what took so long.

Read The Boston Herald Article

Innocent Tenants Suffer Due To Foreclosures

Even innocent tenants that are reliably paying their rent are being evicted by banks foreclosing on the property they live in, The Boston Globe reported December 17, 2007.

Many banks are refusing to sell properties with tenants on the premises, even when buyers are willing to buy those properties.

"The question is whether lenders and other companies that own these buildings will agree to sell the buildings with tenants still in them. [One potential buyer] has been turned down twice. According to local real estate professionals, others who have inquired about buying foreclosed properties in Boston also have been turned away."

In a December 22, 2007 article, The Boston Globe reported that tenants in some foreclosed Boston apartment buildings are living without adequate heat because banks that now own the properties have not repaired broken heating systems or paid for the delivery of heating oil.

"Some foreclosed buildings also lack electricity, or hot water, or even running water, and the tenants may have no one to call: The new landlords often fail to provide tenants with a contact number, as required by Massachusetts law. And when landlords can be reached, the response is often so limited - half a tank of heating oil, for example - that the problems recur within a few days."

The Globe reported December 27, 2007 that heat had been restored to some apartment buildings that were experiencing problems with heat.

More Help For Homeowners Facing Foreclosure

President Bush signed legislation that will provide financial relief for homeowners facing foreclosure or in bankruptcy, the Boston Herald reported December 20, 2007.

"The bill gives a tax break to homeowners who have mortgage debt forgiven as part of a foreclosure or renegotiation of a loan. No taxes would be owed on the value of any debt forgiven or written off. Currently such debt forgiveness is taxable income."

It is anticipated to reduce taxes for some homeowners by $650 million; however, the cost to the government would be offset in part by limiting a tax break available on the sale of second homes.

In other words, if you saved your money, made sound financial decisions and were able to purchase and then sell a second home, you have to pay higher taxes. If you bought a home you couldn't afford and made poor 
financial decisions, you get a tax break. Happy holidays!

Read The Boston Herald Article

Massachusetts Foreclosure Data

The following reflects market numbers between December 7 and December 13, 2007, according to The Warren Group.

County             Petitions & Lis Pendens        Auctions            Bank Owned/REO

Barnstable:            25                                        15                              1

Berkshire:              4                                          2                               0

Bristol:                   47                                        17                             8

Essex:                   73                                        14                             17

Franklin:                 3                                          0                               0

Hampden:               73                                        26                             14

Hampshire:              6                                         1                                0

Middlesex:              83                                        53                              12

Nantucket:              0                                          1                                0

Norfolk:                   47                                        34                              7

Plymouth:               70                                        64                              12

Suffolk:                   70                                        35                              14

Worcester:              95                                        32                               17

Analyze A Property's Investment Potential

The free widget below provides a basic analysis of a property's investment potential. A paid version also is available and provides more flexibility in the way data can be imputed and analyzed, but the free version below provides a decent analysis.

I tell clients interested in investment properties who want to take a conservative, and I would suggest smart, approach to investing in real estate, such as a multi-family property, to assume rental property will be rented 45 months out of the next 60 months (on average nine months per year). For example, if the rental income is $2,400 per month, then multiply $2,400 by nine to get a conservative estimate of annual income.

Your property may be fully rented in the first two years, but vacant nine months in year three. You just can't predict it. If it does better than that, great, you have that much more cash to invest in your second property.

Of course, if you plan to occupy a part of the property, then your analysis would be a little different. If it is a commercial property, and you are certain you can obtain a long-term lease with a financially solid tenant (two big "ifs"), using 45 months rented out of the next 60 for your analysis might be a little too conservative.

Use the link in the right-hand column to get foreclosure property listings in communities you are interested in.

Powered by iAnalyzeREI: Real Estate Investment Analysis

Treasury Official Defends Bush's Mortgage Plan

Undersecretary of the United States Treasury for Domestic Finance, Robert Steel, spoke with National Public Radio on December 14, 2007 and defended the Bush Administration's decision to make it's subprime mortgage plan voluntary.

Listen to the NPR Interview of Robert Steel, Undersecretary of the Treasury for Domestic Finance

Freddie Mac Video Fights Foreclosure Scams

One of the largest investors in mortgages in the U.S., Freddie Mac, has produced a video about how to spot foreclosure scams and avoid becoming a victim of a fraud artist.

Freddie Mac decided to produce the anti-fraud video for YouTube after a 2007 company-sponsored study discovered that 25 percent of delinquent borrowers go to the Internet first for mortgage information, only slightly less than the number who called their mortgage lender (28 percent) or bank (32 percent).

According to a press release, Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multi-family residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home ownership possible more than 50 million times, ensuring financing for one in six home buyers and more than four million renters.

Beware Of Foreclosure Scams

This Reuters video from August 2007 discusses foreclosure scams, and how the ethically challenged (aka, scum bags) prey on those facing foreclosure.

Subprime Lenders Flee Massachusetts

With foreclosures piling up, subprime lenders have fled Massachusetts.

Eight of the ten largest subprime mortgage specialists in Massachusetts are no longer lending in the state, the Boston Herald reported December 3, 2007.

"Eric Rosengren, head of the Federal Reserve Bank of Boston, says that the only two such lenders still operating in Massachusetts are Option One Mortgage and First Franklin Financial."

Read The Boston Herald Article