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September 1, 2006
Foreclosure Fright: It's spreading
I am astounded by all the foreclosure notices being published in the legal classified section of The Sun. On Wednesday, there were 10 legal notices. ON Thursday, there were eight. Over the past month of August, the trend was building steadily: two or three a day. Now it's up to 7 or 8.
Richard Howe Jr.,, the Register of Deeds for Middlesex County, has been writing up the trend for nearly 18 months on his Registry blog. It can be found on the web site www.lowelldeeds.com. His observations are based on statistical data the Registry has collected for years.. While the factors behind the rising foreclosure notices vary, one stands out: property owners have maxed out the equity in their homes, afterr refinancing, and at present the loan rates are rising while property values are declining. According to Howe, this is happening to many people who bought property in the 2002-2003 housing boom period. People who took out 5-year adjustable rate mortgages will be hit hardest, particularly if they are trying to refinance at today's higher rates. "Some people are now mxed out on their credit. They financed 100 percent of their homes and as the value increased, they refinanced to go on trips to Disney World or used the money for other things other than improving their property. Now that the values are coming down, they have lost equity and find themselves in a bind. The owe more than the property is worth," said Howe.
Howe's statistics on foreclosures are telling: in 2005, the Registry filed 356 foreclosures; Howe predicts, based on monthly statistics, that 2006 will see an increase to 568 foreclosures. He sees the number increasing in 2007 when more 5-year-adjustable mortgages come due. In 1992, when the housing market bottomed out and the country entered a recession, the Lowell area had 1,036 foreclosures filed at the Registry. Howe said it's likely the 1992 figure could be eclipsed in the next two-year period.
The worst hit in this scenario is the immigrant population.. "These people probably couldn't afford a conventional bank mortgage in the first place, so they sought out loans from national lending firms. They financed 100 percent of their homes with adjustable mortgages,: he said. The payments are now bearing down on them and they can't make them. Accorrding to Howe, 41 percent of the 37 foreclosure notices filed at the Registry in June were related to the immigrant population. "It's likely to increase in the future," he said.
Howe cautioned against panic, but said the foreclosure problem needs a contingency plan. He's been warning about the problem for over a year. "People have to understand that a correction in the housing market is inevitable. What goes up usually comes down. It's a pattern that has happened in the past and will happen again," he said.
From my standpoint, the attorney general's office has done a good job of cracking down on predatory lenders who exploit people who aren't credit worthy. Two such lenders have been shut down in Lawrence. But the problem is how to prevent such predatory schemes from being initiated in the first place. With tougher bankruptcy laws in place, property owners who are pushed into foreclosure are going to be ruined for years to come. they still must make good on credit card debts they've run up by using equity in their homes. I don't know what the solution is, but I'll be assigning several reporters to look into this problem to guage the severity of it and what can be done.
Posted by JimC at September 1, 2006 10:04 AM
Comments
Being from Lowell all my life mostly it makes me sick and still does that "Howe" and other's like him run and win uncontested for jobs like the reg. of deeds I mean come on he already makes enough money as a ambulance chaser and then he desides he wants to suck another 60K or more for a job the tax payers pay for his sectary to do, lets face it the rich run this country and the people within the system all are doing the same thing and making sure no-one stops there free rides while the working man takes it on the chin.
Posted by: Jack Black at September 7, 2006 12:33 PM
Jack, I don't understand where you are coming from. Richard Howe Jr. has done a great job transforming the Register of Deeds to the 21st century needs of all citizens. He has computerized the databases and given exceptional access to all citizens and municipalities. If anything, he might be underpaid for his efforts and I usually reserve my comments when it comes to the public payroll. Of course, I have my differences with Mr. Howe on political issues, but that doesn't mean I can't like the guy or acknowledge that he is a consummate professional at what he does. Plus, Howe's got to go before the voters to keep his job. If the electorate decides, he can be bounced in the voting booth, unlike a lot of public employees who seemingly have to commit no less than murder to get fired.
Posted by: jim campanini at September 7, 2006 2:41 PM
