For a while it seemed like foreclosure activity was starting to moderate in Massachusetts. But today’s report from The Warren Group shows a spike in the number of foreclosures started and completed in March.

And a recent news story in Banker & Tradesman about homeowners with second loans, or second liens, points to even more trouble ahead. 

Colleen M. Sullivan reports in this week’s Banker & Tradesman that almost 70 percent of Bay State homeowners who purchased a home between 2003 and 2007 with some kind of second loan are now underwater.

That translates to about 71,000 homeowners throughout the state who owe more on their homes than they are currently worth.  Are all of these homeowners in danger of defaulting on their loans and therefore at risk of foreclosure? No.

But those homeowners are more likely to face foreclosure if they lose a job or their income is reduced and they can’t make mortgage payments. They won’t be able to sell their home at a price to pay their lender off.

And as the story points out, those homeowners with second liens will have a harder time trying to negotiate a short sale – – a deal in which the lender agrees to a home sale in which the price is less than is owed. 

It’s something that industry watchers and foreclosure prevention specialists are surely paying attention to.