Foreclosure starts were up for the 22nd month in a row in December, rising 118 percent over December 2014 – and up a whopping 329 percent from December 2013. Year-over-year, starts are up 55 percent. Deeds are up 46.1 percent month-over-month and up 21.4 percent year-over-year, according to The Warren Group, publisher of Banker & Tradesman.
The Western part of the state took the hardest regional hit. Petitions are up 68 percent year-to-date in Berkshire County, 65 percent in Franklin, 73 percent in Hampshire and 56 percent in Hamden. Nantucket, though, saw the highest increase, up 183 percent year over year (from 12 to 34).
The numbers, separate from the percentages, tell a slightly different story. Deeds in December in Franklin County were up 1500 percent – that’s correct; it’s not missing a decimal – because it went from a single deed filed in December 2014 to 16 in 2015. In all of Franklin County.
Ask a thousand industry insiders about a thousand specific properties and you’ll get a thousand different answers, but the consensus seems to be that 2013 and 2014 were artificially depressed years for foreclosures. A number of regulatory changes took effect and a number of questions went unanswered until the latter half of 2014. Thus, many of the foreclosures that would have occurred in 2013 and 2014 took place in 2015, in addition to those year’s numbers.
It’s been called, variously, a glut, a backlog, a paperwork problem – and a really big headache – but it has not been called a crisis. For reference, the December with the most foreclosures in history was 2007, when there were 2,724 petitions filed – well short of last December’s 1,224 petitions.
When the rise first began to manifest at the beginning of 2015, the predictions were that it would take between 12 months and two years to clear this clog, though 18 months was the most common answer. The increases in 2016 should begin to level off, as 2016 will still feel the effects of that two-year slow-down, but will be compared to 2015, which suffered from the same effect. It could begin to level off mid-year, but don’t be surprised if it doesn’t.
However, Massachusetts’ startling increases come at a time when foreclosures nationwide are slowing down, which makes the industry’s claim appear suspect. If indeed lenders were waiting for the regulatory environment to settle, why then have foreclosures not picked up across the country?
As is ever the case: location, location, location. The commonwealth at the state level and at the municipal level had more than its share of foreclosure legislation; while most of this shook out nationwide several years ago, cases and case law here remained unsettled for much longer.
While the percentages are shocking and the numbers somewhat unsettling, The Warren Group’s month-to-month tracking and weekly updates in this very newspaper are the best place to stay on top of the market and the industry trends. Don’t panic – chalk it up to another weird year in the housing market – but keep an eye on it, and check back in June.
