Foreclosure activity in Massachusetts is still on the rise.
The number of foreclosure auctions advertised in the state nearly tripled in May compared to one year ago. According to a report from The Warren Group slated for release on Tuesday, 1,589 auctions were announced in newspapers across the state last month compared to 654 in May 2006, a 143 percent increase. Foreclosure auction notices decreased slightly from a high of 1,712 in April. Through the first five months of 2007, 6,419 foreclosure auctions have been advertised, nearly equaling the total of 6,720 for all of last year.
More petitions to foreclose also were filed in May, according to The Warren Group, parent company of Banker & Tradesman. The number of petitions rose to 2,164 last month, up nearly 40 percent from a year ago. Petition activity also was up compared with last month, when 2,005 were filed, just shy of February’s peak of 2,242.
Petitions to foreclose, filed in Land Court by lien holders when a borrower falls significantly behind in payments on a property, are the first formal step in the foreclosure process in Massachusetts.
Not all foreclosure petitions reach the point of being advertised for auction, since homeowners are sometimes able to sell or refinance their homes before that happens. For the same reasons, not all advertised auctions actually take place.
However, the current slump in the local real estate market – which has left some borrowers owing more on their mortgages than their homes are worth – makes selling a troubled property more difficult, either because the sale of the home would not pay off the full amount of the loan or because the pool of potential buyers has diminished.
The number of foreclosure auctions advertised in Massachusetts rose at a steady pace through 2006, which saw a low of 262 notices in January and a high of 757 in August. Overall, foreclosure auction notices jumped by 45.5 percent in 2006 compared with the prior year, from 4,620 to 6,720.
The number of petitions filed by lenders hovered between about 750 and 1,000 from January 2005 through early 2006. It took its first significant jump in March 2006, and has increased steadily since then.
Foreclosure petition filings jumped by 69.7 percent in 2006 compared with the prior year, from 11,155 to 18,926.
The state’s high cost of housing, in general, has forced many borrowers to stretch to attain homeownership and is seen as another factor in the rise in foreclosure activity. Nontraditional mortgage products including pay-option, interest-only and stated-income loans in some cases exacerbated the problem when, in recent years, they increasingly were marketed to lower-income and higher-risk borrowers who were unlikely to be able to pay them off.
