DONNA BROOKS
‘Very time-consuming’

As the foreclosure rate in Massachusetts and other states climbs, Leominster real estate broker Donna Brooks has seen a surge in the number of foreclosed homes she has listed for sale.

Brooks, owner of The Boss Realty Group, is actively marketing at least 30 properties that have been foreclosed on, and her firm has dozens of other properties that lenders have taken possession of which likely will be listed for sale in upcoming weeks.

“There are lots of foreclosures in every spectrum,” said Brooks, who jokingly refers to herself as the “foreclosure queen.”

Brooks and other Realtors said that as foreclosure activity has increased in Boston, Worcester, Springfield and other parts of the state, plenty of new opportunities have arisen out there for agents and brokers. Brokers who are familiar with foreclosures say that Realtors can help consumers, including homeowners who are struggling to pay their mortgages and prospective buyers who are searching for a good deal. Realtors also can team up with banks and mortgage companies that already have foreclosed on homes and want to sell off properties.

But those who have done such work say it comes with challenges.

“It’s very time-consuming. You can’t be lazy and you’ve got to be aggressive,” said Brooks, who handles foreclosure sales for Fannie Mae, Countrywide Home Loans and other national lenders.

Linda Kody, a North Andover real estate broker who is listing and selling foreclosed multifamily properties, single-family homes and condominiums for Fannie Mae in Lawrence and other communities in the Merrimack Valley, said there hasn’t been a lot of foreclosure activity in the last decade. But with the increasing popularity of non-traditional and riskier financing, including interest-only and no-down-payment home loans, over the last several years, many homeowners have found themselves struggling to meet their monthly mortgage payments.

“The foreclosure market has picked up and a lot of people have questions about it,” said Kody, who taught a class on foreclosure and auction sales last week for the Northeast Association of Realtors.

Kody, who owns Kody & Co. in North Andover, said foreclosures were a significant part of her business back in the early 1990s. Now she finds herself handling an increasing number of foreclosure sales. “It’s four times what it was a year ago,” she said.

‘A Lot of Data’
Foreclosure filings in Massachusetts jumped 72 percent in August compared to a year earlier, according to ForeclosuresMass.com. More than 1,800 foreclosures were initiated statewide in August, 72 percent higher than August 2005 and 266 percent above August 2004.

Experts are blaming the increase on various nontraditional loan products, including option-payment adjustable-rate mortgages, which have put many borrowers at risk as interest rates inch up. Many homeowners also have tapped into their home equity to pay off debt and have refinanced into riskier adjustable-rate mortgages.

Some Realtors say it can be tough to help homeowners who already have fallen behind on mortgage payments and have received foreclosure notices from their lender.

But Nelson Zide, senior vice president of Whitinsville-based ERA Key Realty Services, said the chances of success in those circumstances are not very high, particularly in a market where there is large supply of unsold homes and properties are taking months to sell.

“When you see the first foreclosure notice [in a newspaper] the auction is only three weeks away. That’s a small window of opportunity to get the house on the market and attempt to get it sold before the auction,” said Zide.

Zide said a Realtor may be able to convince a lender to hold off on the auction if a buyer has made an offer to purchase the property. But Zide explained that the purchase offer has to be very attractive to convince a lender to postpone an auction.

If the offer is more than what the home seller owes the lender, a lending institution may be more willing to delay an auction so the home could be sold, said Zide. However, with home prices falling, there may be situations where the homeowner owes more than the home is actually worth and it is sold at a loss.

In those types of cases, a Realtor may be able to negotiate with a lender to have the homeowner pay less than is owed on the mortgage, a practice referred to in the industry as a “short sale.” But Zide said the lender will only accept such a deal if it’s a better alternative to an auction sale.

“The lender has to make a decision. Do they take a Â… hit or do they go through with a foreclosure auction?” Zide said. “If the loss is too great, it’s very tough to get a bank to say [OK to the deal].”

With proper documentation, some lenders are willing to forgive debt, according to Brooks. Brooks said she has helped a few homeowners who were in danger of losing their home to negotiate deals and short sales with banks. The process has been very time-consuming and involves mounds of paperwork, according to Brooks.

“There are hundreds of pages of documentation and a lot of data to collect” for the short sale to happen, she said.

Instead of working with homeowners, some real estate agents choose to team directly with banks and mortgage companies.

Back in the late 1980s and early 1990s when foreclosure auctions were more common, Zide said he followed the foreclosure notices, attended auctions and introduced himself to the attorneys working for the lending institutions. That’s the way Zide and other Realtors became familiar with the lenders and formed relationships to list and sell properties for lenders that foreclosed on properties.

“You get known in the business community as the person who will work with the lenders,” said Zide.

Zide said Realtors who do work with lenders have to prove that they can offer management services and that they can provide a list of contractors who make needed repairs.

Zide recalled that in one case he was working on behalf of a lender to sell a home that had its countertops and appliances stripped by the former homeowner.

“You don’t know what you’re going to face,” he said.

Some lenders ask listing agents to provide suggestions for repairs and to obtain estimates from different contractors, according to Roy Caley, an agent with Hammond GMAC Residential. Other lenders handle the repairs and estimates themselves, he said.

Since 2000, Caley has handled only about one or two foreclosure sales a year. But now he’s seeing more and more foreclosed homes in Boston and the surrounding communities. Fannie Mae already has assigned 15 homes in various stages of the foreclosure process to Caley.

“I have been seeing a growth of the inventory,” said Caley.

The larger number of foreclosed homes on the market also can be an opportunity for Realtors who are working with homebuyers and investors who are searching to buy properties at a discount price.

However, potential buyers of foreclosed properties can be intimidated by the condition of a home, since many lenders want to sell a residence as is and will only make repairs to address safety issues, according to Brooks.

And some lenders include addendums to purchase-and-sale contracts that are 25 pages long, Brooks said. “Buyers are afraid of them and some attorneys are too,” she said.

Still, Brooks said agents and buyers have options when foreclosure activity picks up. “Every market has opportunities. People sometimes want to look at the doom and gloom of everything but there are tons of opportunities in this kind of market,” she said.

Zide agreed but cautioned, “There are definitely some opportunities [with foreclosures] but it’s not easy and there are very few agents who are willing to do the work. You really need to know what you’re doing.”