Home crisis relief

Mass Foreclosure & Real Estate News

By John J. Monahan TELEGRAM & GAZETTE STAFF

BOSTON— The first quarter of 2008 has brought disaster to hundreds of Central Massachusetts families who have lost their homes to mortgage foreclosures, and now lawmakers at the state and federal level are searching for ways to prevent even more foreclosures as the mortgage crisis escalates in Worcester County and elsewhere.

State Sens. Harriette L. Chandler, D-Worcester, and Edward M. Augustus Jr., D-Worcester, said Friday they have signed on to a state legislative initiative to give homeowners more of a fighting chance when facing foreclosure.

A package of three Senate bills would mandate a judicial review before a home mortgage foreclosure could be approved, provide a six-month moratorium on foreclosures involving subprime mortgages, and prohibit eviction of tenants when their landlord’s property gets foreclosed.

Mrs. Chandler said the foreclosure crisis is mushrooming in Worcester County and current trends are expected to worsen for the rest of the year. While the protective steps called for in the bills would slow the foreclosure process and keep some families in their homes as foreclosures proceed, she said, broader long-term solutions are also needed.

“In order to protect families and our economy, we must act swiftly to provide our residents with the tools necessary to protect their rights and allow the commonwealth to develop a more comprehensive solution to the crisis,” she said in announcing her support for the legislative proposal.

Mr. Augustus said any relief from foreclosure would be welcomed by working families and individuals struggling to keep their homes. The proposed laws would give them breathing room needed to deal successfully with the mortgage crises they are facing.

The three bills, he said, would provide a temporary moratorium on foreclosures for subprime mortgages and hold off evictions of tenants whose rents are paid up when their landlords face foreclosure.

Supporters of the bill said 29 states already require court approvals before a foreclosure proceeds.

A special commission would also be formed to make more legislative recommendations as the crisis proceeds.

The lawmakers said that in the last five weeks, foreclosures have escalated in Worcester County, with 548 homes put up for auction and another 658 facing petitions for foreclosure. That is more than any other county in the state, they said.

A forecast from Foreclosuresmass.com, which tracks and markets foreclosure information for commercial purposes, indicated that record levels of foreclosures will unfold around the state through the rest of this year.

Last year, the company said, was the worst in the history of Massachusetts for foreclosures, ending with two consecutive quarters of record home foreclosures.

“Our forecast for 2008 is even gloomier,” said Jeremy Shapiro, president of the company. The impact of adjustable rate mortgages, subprime loans, tight credit markets hampering refinancing, declining property values, higher energy costs and a slumping economy have all combined to make the situation in Massachusetts bleak, he said.

In the last 12 months, the ForeclosuresMass.com market analysis tracked 31,516 foreclosures in the state. In January, there were 3,320 foreclosure filings, the single highest monthly number on record, and there were 2,681 in February. The analysis predicts a 15 percent to 25 percent increase over those record numbers for the rest of 2008 in Massachusetts.

In Washington, U.S. Sen. John F. Kerry, D-Mass., offered proposals to allow states that previously used government-backed bonds to help finance first-time home buyers to expand their use to include refinancing of subprime mortgages. That provision, which was in the economic stimulus package that provides for $600 to $1,200 rebates for taxpayers nationwide, was blocked by Republican opponents as the package was formulated. Democrats have said they want to include foreclosure measures in a subsequent stimulus package being considered for later this year.

Now Mr. Kerry is pursuing special programs to prevent active-duty service members and their families from losing their homes to foreclosure.

That legislation would expand the Service Member Civil Relief Act by extending an existing cap of 6 percent on mortgage interest rates from the current 90 days to one year after active-duty service members return home. It would also extend the existing protections from foreclosure for those service members from 90 days to one year after returning from active duty.

Mr. Kerry said immediate steps are needed to ensure that those serving in Iraq and Afghanistan do not return to unaffordable hikes in mortgage interest rates.