Failure to modify mortgages spurs Massachusetts bankruptcies and foreclosures

The foreclosure rate in Massachusetts set another record in July, with 1243 homes lost, an 80% increase over the previous year, according to the Boston Globe.

Reasons for the spike in foreclosures are many, housing specialists and economists say, including the failure of government programs to spur lenders to modify mortgage loans.

“They are foreclosing on people who are willing to and have the resources to address their delinquencies,’’ said one Boston lawyer.

“I’ve done this work for 25 years, and I’ve never seen anything like this. I’ve never seen so many people in a position to work something out who are getting rebuffed.’’

“Many of the [modifications] are going into re-default due mostly to rising unemployment,’’ said Kevin M. Cuff, outgoing executive director of the Massachusetts Mortgage Bankers Association. “All federal programs are much less successful than originally hoped.’’

If you are looking for a light at the end of the tunnel, there may be one in this data: the number of homeowners getting into financial trouble has slowed slightly. Foreclosure petitions, the first step in the process, fell to 2,307 in July, a 20.4 percent drop from the same month in 2009, according to Warren Group. There were 15,645 foreclosure petitions filed during the first seven months of the year, compared with 16,712 during the same time last year.

Also on the plus side, it looks like Boston area home values also increased slightly over the summer, posting a 1.2% increase for the month of June.

 

By Doug Beaton

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