Massachusetts Foreclosed Homes

Judge Rules Subprime Loans Violate MA Law

A Massachusetts Superior Court judge has ruled that some kinds of mortgages violate the Commonwealth's consumer protection law, a ruling that will slow foreclosures in the state, the Boston Herald reported February 27, 2008.

“'It is both imprudent and unfair to approve mortgage loans that the borrowers cannot reasonably be expected to repay if housing prices were to fall,' Judge Ralph Gants wrote in a preliminary injunction against subprime-lending giant Fremont Investment & Loan."

Attorney General Martha Coakley brought the suit against Freemont, and Judge Gants ordered Fremont to give the state up to 90 days to review and attempt to resolve individual potential foreclosure cases.

California-based Fremont covers about 2,200 Massachusetts mortgages the firm issued or manages for third-party investors.

"The judge also stressed that he’s not permanently excusing homeowners from repaying loans. 'The spirit of this decision is (merely) that Fremont, having helped borrowers get into this mess, now must take reasonable steps to help them get out of it,' Gants wrote."

Read The Boston Herald Article

U.S. Congressman Barney Frank Has A Plan For States To Buy Foreclosed Homes

U.S. Representative Barney Frank, a Massachusetts Democrat, wants the federal government to loan states $5 billion to buy foreclosed homes on the cheap and turn those properties into affordable housing, the Boston Herald reported February 26, 2008.

“'It’s a good time to do some socially responsible bottom feeding,' Frank, a Newton Democrat who chairs the House Financial Services Committee, told the Herald. 'Having (abandoned) property sit unsold on the market is just awful. We think states can buy it up - hopefully at reduced prices.'”

The idea is part of proposed legislation that would cost more than $7 billion to combat the foreclosure crisis.

Meanwhile, in the U.S. Senate, Massachusetts Democrat John Kerry has proposed, with Republican Senator Gordon Smith, using $10 billion in tax-free bonds to give distressed homeowners affordable loans.

Read The Boston Herald Article

Many Americans Owe More Than Homes Are Worth

More than 10 percent of American homeowners owe more on their mortgage than the value of their home, according to a new study by Moody’s Economy.com and reported on in a blog post by Boston Globe reporter Binyamin Appelbaum on February 22, 2008.

Binyamin refers to this as borrowers being "underwater." I also have heard the phrase "upside down on your mortgage."

"The borrowers can’t refinance because no new lender will write a loan for more than the home is worth. The industry has charged that some are simply refusing to make payments, and either abandoning their homes or waiting for lenders to kick them out. So far, the evidence is anecdotal, but the very idea terrifies the industry."

Read The Post And Comments

Massachusetts Foreclosures Rise 128% In January

Nearly 800 foreclosure deeds were recorded in Massachusetts in January, an increase of 128 percent compared to January 2007, The Boston Globe reported February 21, 2008.

The data was provided by The Warren Group, a publisher of local real estate information.

"There were 799 foreclosure deeds in January, up 128.3 percent from the 350 deeds in January 2007, the firm said, and January 2008 also marks the highest number of deeds during any month since August 2007, when there were 1,018."

The foreclosure crisis is far from over.        Petitions to foreclose, the first step in the foreclosure process, also increased in December.

"Lenders filed 2,729 petitions to foreclose in December, up 28 percent from the 2,133 filed during the previous December, said the Warren Group, which added that the December 2007 number is up slightly from the 2,723 petitions filed during November 2007."

Petitions to foreclose do not always end in an actual foreclosure because some homeowners eventually sell their homes (sometimes via a short sale), catch up with payments, refinance or find some other way to halt the foreclosure.

Read The Boston Globe Article

Georgia Bank Robber Angry Over Foreclosure

Angry after a foreclosure, a man wielding a gun robbed an Athens, Georgia bank on February 21, 2008, United Press International (UPI) reported February 22, 2008.

"'You took my house, now I'm going to take your money,' the robber told the teller as he pointed a gun at her, Police Capt. Clarence Holeman said"

Read The UPI Article

U.S. Senate Will Debate Foreclosure Bill

Debate will begin in the Democrat-lead United States Senate next week on a foreclosure bill that will allow bankruptcy judges to erase mortgage debt and provide billions to rehabilitate abandoned properties, Reuters reported February 22, 2008.

The bill, known as the "Foreclosure Prevention Act of 2008" and sponsored by Democrat leader Harry Reid of Nevada, likely will have bipartisan support for some aspects of the legislation and fierce Republican opposition to other aspects.

"Banking lobbyists say the bankruptcy provision would drive up borrowing costs since lenders will want to charge more as an insurance policy against possible bankruptcy-related losses."

Read The Reuters Article

Presidential Candidates Differ On Foreclosure Fix

Democrat Party presidential hopefuls Hillary Clinton and Barak Obama have been talking about the foreclosure mess recently, with Ohio, a state hit hard by foreclosures, going to the polls on March 4, 2008.

The candidates differ on how they would approach fixing the foreclosure crisis.

Clinton believes that government intervention is necessary. She proposes ceasing foreclosure proceedings for 90 days to allow borrowers and lenders to work on modifications, instituting a five-year interest-rate freeze on adjustable-rate, subprime mortgages for primary residences only, and the use of government-backed mortgages to refinance borrowers who can no longer manage their monthly payments.

On the other hand, Obama believes that government involvement will force lenders to put the brakes on making new loans and modifications. Instead, he is focusing on stricter penalties for predatory lenders, tax credits for mortgage interest and a $10 billion fund dedicated to preventing foreclosure and assisting first-time buyers.

Source: REALTOR® Magazine Online

Nonprofits Busy As A Result Of Foreclosure Crisis

Nonprofit groups around Massachusetts are working overtime to help homeowners faced with the possibility of foreclosure, The Boston Globe reported February 7, 2008.

These groups are trying to help struggling homeowners refinance debt, reschedule overdue payments, or in the worst case, deal with a foreclosure.

"'My goodness, we are inundated with people who are calling and coming in and e-mailing,' said Sheila Yancy, the director of ACORN Housing of Boston, a nonprofit that provides free housing counseling for low- and moderate-income people. Keeping up with struggling homeowners is a problem, she said. 'So many are discouraged, they just want to give up.'"

MassHousing, a quasi-governmental lender, is providing $250 million for refinancing mortgages for those in trouble.

"ACORN tries first to get lenders to postpone the foreclosure while a plan is worked out, said Yancy. For example, if a borrower is three months behind and the mortgage is 8 percent, ACORN tries to renegotiate a lower, fixed rate, with the owed money wrapped into the loan."

Read The Boston Globe Article

Foreclosed Properties Problem In Boston

A Boston city councilor was expected to introduce an ordinance this week that would require companies to register foreclosed properties with the city, identify who is responsible for maintenance, post their contact information on the property, and pay a $100 annual fee on each vacant home, The Boston Globe reported January 30, 2008.

City Councilor Robert Consalvo told The Boston Globe the city is spending thousands of dollars to maintain and secure vacant houses owned by companies that are not meeting their obligations as Boston property owners.

Consalvo said "problems include unlocked doors, undrained pools, unplowed walks, untrimmed hedges and lawn trash."

Most importantly these eyesores are effecting the rest of the neighborhood.

"A house on Chesterfield Street in Hyde Park was foreclosed in June 2006. It has been vacant since. But the pool out back was full of water until the city recently paid to drain it."

Read The Boston Globe Article