Residential foreclosure starts dropped slightly in July, ending a 28-month streak of year-over-year increases that the lending industry claims were mostly years-old delinquencies dating back to the days following the 2009 Ibañez decision.
Activists say the homes in foreclosure today are a mix of new and old cases. They say many of people getting foreclosed on now are victims of subprime lending who can’t refinance because they’re still underwater, but they kept up with their payments until an unplanned change in employment or health meant they couldn’t pay their bills.
“At some point you’ve got to believe these are actual new cases and not a backlog,” said Grace Ross, an organizer with the Worcester
Anti-Foreclosure Team (WAFT). “There are some people from a long time ago, but I see plenty of people who became delinquent two years ago or less. The banks’ claim that this is all backlog is just plain not true.”
The Numbers
In July, lenders filed 1,032 petitions to foreclose on Massachusetts homeowners, compared to 1,044 filed in July of last year, according to data from The Warren Group, publisher of Banker & Tradesman. That’s a decrease of 1.1 percent, or 12 petitions, but a welcome, if tiny, improvement.
The news isn’t all good, though. Year-to-date, foreclosure starts are up 20.2 percent over 2015. Auction notices are up 44.3 percent and deeds were up 42 percent from the same time last year.
Gateway Cities continue to see increases in foreclosures, though the rate of increases seems to be slowing. Year-to-date there have been 318 foreclosure starts in Worcester compared to 202 last year, an increase of 57.4 percent. There have been 229 auctions in the city so far this year and there was 132 during the same period in 2015.
The dramatic increase in petitions began early in 2014. According The Warren Group’s calculations, the foreclosure process takes about five quarters from beginning to end, so it follows that auctions and deed filings would be up following the increase in starts.
Lori Cairns, an organizer for WAFT, is herself facing eviction from her home. Cairns said she began leasing a home from a couple who lost it to foreclosure in September 2015. The Bank of New York Mellon (BNYM), which now owns the home, is trying to evict her. Cairns claims the foreclosure was illegal and therefore BNYM’s title is not clear.
“The first eviction, I got a phone call telling me to come to court at 9 a.m.,” Cairns said. “I was petrified. I’ve never done anything criminal in my life. They called me a criminal and a liar. I didn’t have a lawyer. They couldn’t evict me because I wasn’t given three days’ notice for the hearing.”
BNYM’s attorney James F. Creed Jr. said he didn’t call Cairns a criminal or a liar, though he does allege she is practicing law without a license, which is a crime.
Cairns wrote a brief to the Appeals Court in Boston and has another hearing this month. Meanwhile, she has a 20-hour per week paid position helping homeowners fight foreclosures and evictions with WAFT, but she said she actually works a lot more than that.
“I counsel all kinds of people who call me when they’re going through the process,” Cairns said. “We have members writing briefs, preparing people to go to court, writing grants, doing outreach to 80 to 100 homes every month; it’s a 24/7 job.”
Even Cape Cod, generally thought of as a bastion of affluence, is seeing a rise in foreclosures; for example, starts are up 33 percent so far this year in the town of Barnstable.
“When we see foreclosures, it’s often a case where homeowners facing financial problems will walk away from their second home on the Cape,” said Annie Blatz, president of the Massachusetts Association of Realtors and manager of several Kinlin Grover offices, including the Barnstable office. “A large percentage of them are related to medical issues. On the Cape we have a lot of elderly people.”
Barnstable is one of the many communities on the Cape where home values have not fully recovered from the crash, making it financially infeasible for many homeowners to refinance their mortgage.
It’s a similar situation in Gloucester, said Bob Dumais, who counsels homeowners facing foreclosure for the Gloucester Housing Authority. Gloucester has had 31 foreclosure starts so far this year compared to 16 during the same time last year, an increase of 93.7 percent. Auctions and deeds have increased similarly. Dumais said many are victims of the one-two punch of job loss and lack of equity.
“They’re out of work, or they get divorced, and they fall behind,” Dumais said. “Some people had a job, but they lost it and had to take a lower-paying job. We seem to be seeing more of that this year. And there’s just not enough equity to refinance.”
