Merrimack Valley foreclosures blamed on high unemployment

More long-term homeowners with “good’’ fixed-rate mortgages are facing foreclosure, likely because of job losses, according to a University of Massachusetts Lowell researcher.

The financial industry appears to have worked through much of the “bad’’ adjustable-rate mortgages from the housing bubble, many from predatory lenders, UMass Lowell researcher and writer Keith Vaillancourt told the Boston Globe .

More and more long-term homeowners with conventional fixed rate loans are facing foreclosure this year, indicating the problem is spreading rapidly to middle class people hit with job cutbacks.

“We’ve been seeing families affected more and more by the poor job market, families losing income due to job loss or hours being cut or overtime being cut,’’ Jaunita Bonilla, a director at Lawrence Community Works, said. “In some cases, families purchase their home with two jobs, it was the only way they could afford to purchase a home . . . and they’ve lost one of those jobs. It’s a vicious cycle going on.’’

Writing in the Merrimack Valley Housing Report, Vaillancourt reported that pending orders of notice and actual foreclosures are up over 2009 in Haverhill, Lawrence, Lowell, and Methuen, sometimes more than double. Even suburban Dracut showed large increases. Only Lawrence stayed level in actual foreclosure deeds.

Emily Rosenbaum of the Home Preservation Center in Lowell related a typical case story: “One gentleman we helped recently was a contractor who had his own construction company who had to close it due to lack of business. Now he works at Lowe’s,’’ said Rosenbaum. “He was in his mid-50s. We were able to get him a loan modification; he’s going to be OK, he saved his home. But he had to make some dramatic lifestyle changes.’’

An additional kicker is that each foreclosure adds to the inventory of “REO” properties — bank held houses that depress the market while they sit idle, vacant, and deteriorationg as they wait to be sold.

If you are caught in a foreclosure situation, a bankruptcy filing might be able to help you in one of three ways: It can buy you more time in your house rent-free, while you search for new lodging; if you still have steady income, a house can be saved through Chapter 13; and bankruptcy avoids income tax complications associated with short sales and deeds in lieu of foreclosure.

 

By Doug Beaton

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