Massachusetts Foreclosure Monitor Third Quarter 2008 m.l.S.Z.A•fieLWIAftri.WiTsW,WRM"Air&VMStinT"SMI, ,,... fErnitIME..e738..4. A quarterly report for public officials and community leaders working to address the foreclosure crisis in Massachusetts MESAMMIAMMeSt7 Market Overview Massachusetts Housing Inventory Being Absorbed; Modest Price Decline Continues Despite gloomy descriptions of the housing market, home prices are increasing in many states. The Federal Housing Finance Agency reported that prices increased in 30 states from Q2 2007 to Q2 2008, with the largest increase in Oklahoma (4.9 percent). Massachusetts came in 43rd, with a decrease of 2.9 percent. As expected, Florida (-12 percent), Nevada (-14 percent) and California (-16 percent) had the largest price decreases. A recent Business Week analysis found that in Q2 2008, 24 percent of sales in Massachusetts were of distressed properties, up from 8 percent the year before. Distressed sales were a higher percentage of sales in seven states, with California topping the list (41 percent ). The Massachusetts Association of Realtors (MAR) reported that September sales prices were down 13.2 percent from a year ago for single-family homes, and down 7.3 percent for condominiums. In more promising news, MAR also reported 10.2 months inventory of homes on the market in September, down from 12.0 months in September 2007, and well below the recent high of 16.6 months in February. MAR considers inventories of 7.5 months to 8.5 months to be a balanced market. Foreclosures in Massachusetts Increased 72 percent from 2007 to 2008 The Warren Group recently announced that more than 9,609 foreclosure deeds had been filed in Mas- sachusetts in the first three quarters of 2008, up from 5,593 the year before, a 72 percent increase. A foreclosure deed is the Loans with Forelcosure Initiation in the Quarter, final step in the foreclosure process. High quality comparable United States, New England and Massachusetts, through Q2-2008 data on foreclosure deeds from across the country is not avail- 1.4% able. The Federal Reserve Bank of Boston recently reported 1 2% that while the percentage of Massachusetts loans in foreclo- 1.0% sure mirrored the nation in 2007, in Q2 2008 the rate fell in Mas- 0.8% sachusetts as a new 90 day right to cure took affect, delaying 0.6% foreclosure proceedings. Mortgage Bankers Association/Haver o 2% OA.% Analytics 60 day + delinquency data paints a gloomier picture, 0.0% C, with 17 percent of Massachusetts sub-prime adjustable loans in g delinquency in Q2, compared to 12 percent for the nation as a 0 0 whole. LC, c,9 § 0 0 000 00 0 a i7 Source: Federal P.asena Bank of Boston and Ore Mortgage Banker,: ,r.nc.anonl-isvor Analytics Massachusetts Has Average Proportion of Subprime Loans; Among the Highest Subprime Default Rates Good data on the size and condition of out.standing sub-prime loans (the group of loan products most at risk in the current economy) has become available through a relationship between the Federal Reserve Bank of New York and First American LoanPerformance. This data covers approximately 47 percent of sub-prime lending, and provides insights into the size of the portfolio that may go into foreclosure. As of Published by the Massachusetts Housing Partnership www.mhp.net Compil ,F-f Fnci edited by Tim D,:r s pc.h us e,..1s
A quarterly report for public officials and community leaders working to address the foreclosure crisis in Massachusetts
MESAMMIAMMeSt7
Market Overview
Massachusetts Housing Inventory Being Absorbed; Modest Price Decline Continues
Despite gloomy descriptions of the housing market, home prices are increasing in many states. TheFederal Housing Finance Agency reported that prices increased in 30 states from Q2 2007 to Q2 2008,with the largest increase in Oklahoma (4.9 percent). Massachusetts came in 43rd, with a decrease of2.9 percent. As expected, Florida (-12 percent), Nevada (-14 percent) and California (-16 percent) hadthe largest price decreases. A recent Business Week analysis found that in Q2 2008, 24 percent ofsales in Massachusetts were of distressed properties, up from 8 percent the year before. Distressedsales were a higher percentage of sales in seven states, with California topping the list (41 percent ).
The Massachusetts Association of Realtors (MAR) reported that September sales prices were down13.2 percent from a year ago for single-family homes, and down 7.3 percent for condominiums. In morepromising news, MAR also reported 10.2 months inventory of homes on the market in September, downfrom 12.0 months in September 2007, and well below the recent high of 16.6 months in February. MARconsiders inventories of 7.5 months to 8.5 months to be a balanced market.
Foreclosures in Massachusetts Increased 72 percent from 2007 to 2008
The Warren Group recently announced that more than 9,609 foreclosure deeds had been filed in Mas-sachusetts in the first three quarters of 2008, up from 5,593 theyear before, a 72 percent increase. A foreclosure deed is the Loans with Forelcosure Initiation in the Quarter,
final step in the foreclosure process. High quality comparable United States, New England and Massachusetts,through Q2-2008
data on foreclosure deeds from across the country is not avail- 1.4%
able. The Federal Reserve Bank of Boston recently reported 1 2%
that while the percentage of Massachusetts loans in foreclo- 1.0%
sure mirrored the nation in 2007, in Q2 2008 the rate fell in Mas-0.8%
sachusetts as a new 90 day right to cure took affect, delaying 0.6%
Analytics 60 day + delinquency data paints a gloomier picture,0.0%
C,with 17 percent of Massachusetts sub-prime adjustable loans in gdelinquency in Q2, compared to 12 percent for the nation as a 0 0whole.
LC,
c,9 §0 0 000 00 0 a i7
Source: Federal P.asena Bank of Boston andOre Mortgage Banker,: ,r.nc.anonl-isvor Analytics
Massachusetts Has Average Proportion of Subprime Loans;Among the Highest Subprime Default Rates
Good data on the size and condition of out.standing sub-prime loans (the group of loan products most atrisk in the current economy) has become available through a relationship between the Federal ReserveBank of New York and First American LoanPerformance. This data covers approximately 47 percent ofsub-prime lending, and provides insights into the size of the portfolio that may go into foreclosure. As of
Published by the Massachusetts Housing Partnership www.mhp.netCompil ,F-f Fnci edited by Tim D,:r
s pc.h us e,..1s
Massachusetts Foreclosure Monitor: Third Quarter 2008
August 2008, there were 19.5 outstanding sub-prime loans per 1,000 housing units, placing Massachu-setts 25th among the states. The market share of subprime loans was twice as high in the hardest-hitstates of California, Florida and Nevada than it was in Massachusetts. Although the state ranks in themiddle of the pack, the news on the status of these loans is distressing as only 51 percent of Massa-chusetts owner-occupants with subprime loans are current on their payments. California, Florida andMichigan are the only states with higher subprime delinquency rates than Massachusetts. Massachu-setts ranks 19th in the percent of subprime loans in the foreclosure process and 8th in the percent ofsubprime loans that have become bank-owned foreclosed properties.
44 Percent of the Units Affected by Foreclosure in 2008* Are in2— and 3-Family Homes
By and large, data on foreclosures has focused on properties. In Massachusetts, where there are alarge number of two— and three-family properties, an analysis of the number of units (both homeownerand renter) is necessary to get a clear picture of the affect of foreclosures on communities. Using War-ren Group data, Table 1 shows Massachusetts foreclosure petitions** by property type. From this data,the total number of units can be determined. Overall, the foreclosure petition rate has increased from9.1 units per 1,000 housing units in 2006 to 13.5 in 2007 (up 48 percent), and then declined to 12.4 in2008 (down 8 percent). Some of this decline is attributable to a new 90-day right to cure period meantto give delinquent borrowers a better chance at a resolution before foreclosure proceedings begin. Tak-ing affect May 1, 2008, the number of petitions dropped 79 percent from May/June 2007 to May/June-2008. More time is needed to assess whether there has been a long-term change in the foreclosure pe-tition rate. In 2006, single-family homes represented 67 percent of the properties in foreclosure, but only51 percent of the units. By 2008, single-family homes were 60 percent of the properties and 45 percentof the units. After a 90 percent increase in the number of foreclosure petitions, condominiums increasedfrom 10 percent of the properties and 8 percent of the units in 2006 to 15 percent of the properties and10 percent of the units in 2007. Condominiums were 15 percent of the properties and 11 percent of theunits in 2008. Two— and three-family homes increased from 23 percent of the properties and 41 percentof the units in 2006 to 25 percent of the properties and 44 percent of the units in 2008.
Source: MHP analysis of VVarren Group data.references to 2008 in this section refer to the first half of 2008 only.
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Massachusetts Foreclosure Monitor: Third Quarter 2008
Communities and Neighborhoods with Concentrated Foreclosures
Table 2 provides a snapshot of foreclosure petitions during 2006, 2007 and the first half of 2008. In2006, Brockton topped the list, with 30.7 units affected per 1,000 units, 3.4 times the statewide rate.Nine of the top 20 town/cities were in Worcester County (Athol, Fitchburg, Warren, Winchendon,Leicester, Worcester, Ashburnham, Barre and Lancaster), with another six in Southeastern Massachu-setts (Brockton, Mashpee, Holbrook, New Bedford, Halifax and Wareham).
From 2006 to 2007, statewide foreclosure activity increased 48 percent, but it increased 91 percent inLawrence, bringing this city to the top of the list. Note that by 2007 five cities in Massachusetts hadhigher foreclosure rates than the previous statewide peak observed in Brockton the year before. Again,Worcester County and Southeastern Massachusetts communities are well represented. Revere madeits debut at seventh on the list, with foreclosure activity increasing 115 percent.
From 2007 to the first half of 2008, foreclosure activity decreased 8 percent. Outcomes for individualtowns and cities is mixed. Lawrence remained at the top of the list, with a 3 percent decrease in activ-ity. Foreclosure activity also fell in cities such as Brockton (-23 percent), Fitchburg (-17 percent), Spring-field (-20 percent) and Revere (-14 percent). Foreclosure activity increased in Lynn (12 percent),Everett (23 percent), Chelsea (15 percent) and Randolph (9 percent).
Table 2. Foreclosure Petition Activit , To • 20 Munici • alities Housin • Units > 1,000
Brockton 30.7 Lawrence 50.4 Lawrence 49.126.4 Brockton2 Lawrence 44.2 Lynn 37.6
3 Springfield 21.7 33.9 34.5EverettFitchburg4 Athol 21.6 Lynn 34.2Brockton33.6
21.5 31.85 Fitchburg Springfield 34.0Ashby6 Warren 20.5 Chelsea 29.6 Chelsea 33.97 Winchendon 19.6 29.4Revere 32.8North Brookfield8 Lynn 19.2 28.1Winchendon9 Leicester
Haverhill20 Wareham 14.7 New Bedford 20.5 Mashpee 19.7
Statewide 9.1 Statewide 13.5 Statewide 12,4Source: MHP analysis of Wan en Group foreclosure petition data, in conjunction with 2000 Census housing unit data, The peti-tion rate is an annualized rate for the first half of 2008.
Massachusetts Foreclosure Monitor: Third Quarter 2008eraxmasmma.
A break-down by zip code clarifies the geography of foreclosures, and allows for neighborhood analy-sis. No small communities are represented in 2006, and Dorchester's 02121, 02122, 02124 and 02125and Mattapan's 02126 are all in the top 20. Springfield, Brockton, Lawrence and Worcester are alsorepresented. In both 2007 and 2008, Lawrence's 01841 had the highest rate of foreclosure petitions,and this rate increased from 30.6 per 1,000 housing units in 2006 to 62.2 in 2007 (a 103 percent in-crease) and to 63.4 in 2008. In addition to the distress occurring in Lawrence, the rapid increase in thepetition rate in Lynn's 01902 and 01905 should be noted, with a 22 percent increase in petitions to 42.5per thousand units in 01902 and a: 10 percent increase in 01905 to 38 units per thousand from 2007 to2008. These figures compare to statewide rates of 9.1 in 2006, 13.5 in 2007 and 12.4 in 2008.
Source: a., alysis of Warren Group _lorec;osure petition data c^ junction with 2000 Cei - sus housing unit data. The peti-ljon rate is an rate for the first half
Massachusetts Foreclosure Monitor: Third Quarter 2008
Lawrence 250500 216.12 Springfield 800900 4 158.23 Lawrence 250500 4 128.84 Lawrence 251100 3 121.25 Lawrence 251400 3 117.06 Lynn 206400 5 115.77 Lawrence 250700 3 115.58 Dorchester 092000 3 114.59 Lawrence 250600 3 113.710 Springfield 800900 5 113.411 Worcester 732400 5 111.512 Lawrence 250200 2 111.113 Worcester 732400 4 111.114 Lynn 205800 2 109.815 Springfield 801800 6 107.616 Brockton 511500 1 107.017 Lawrence 250300 1 106,918 Lawrence 251300 3 102.919 Lowell 312000 2 100.520 Lynn 207100 1 99.8
Neighborhoods inLawrence Have the Highest
Foreclosure Rates
Given the limited resources avail-able to tackle foreclosures, it isimportant to pinpoint the hardesthit sub-neighborhoods. Censusblock groups, with approximately100 to 400 housing units, providethe basis for research of small ar-eas.
At this level, the problems facingLawrence are even more pro-nounced, containing nine of Mas-sachusetts' 20 block groups withthe highest foreclosure rate inFY2008. Lynn and Springfieldeach contained three of these """block groups. Brockton, Dorches-ter, Lowell and Worcester are alsorepresented in the top 20.
Source: MHP analysis of Warren Gr up foreclosure petition data, in conjunction with2000 Census housing unit data.
FY2008 Petition Rate, Top 20 Block Groups, by City (Number of Block Groups)
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Massachusetts Foreclosure Monitor: Third Quarter 2008
identifying Foreclosure Clusters in Urban Neighborhoods
Lawrence's Census Tract 250500, Block Group 2, located in the Arlington neighborhood, had the high-est FY2008 foreclosure petition rate in Massachusetts, with 216 units per 1,000 affected by foreclosureactivity. Mapping these properties becomes a powerful tool in isolating the highest concentrations offoreclosures. Individual streets can be identified for targeted resources, as Boston has done with itsForeclosure Intervention Team (FIT). Mapped below, Bennington Street stands out, but more impor-tantly, it reveals that the entire block group is struggling.
Citizens' Housing and Planning Association, through a partnership with, the Warren Group, is preparinga subscriber based web service that will allow local towns and organizations to track foreclosure activ-ity, property-by-property, with information on a property's mortgage, foreclosure activity and re-sale.This will increase state and local agencies' ability to funnel the appropriate resources to neighborhoodsand individual properties.
Lawrence, Census Tract 250500, Block Group 2Residential Properties with Foreclosure Petitions or Auctions Scheduled, FY2008
Lawrence
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GardnerLeominster 48.7%
Table 1: Homes with NegativeEquity, Top 20 Massachusetts
The "Massachusetts Foreclosure Monitor" is MHP's periodic examination of statewide and local foreclo-sure trends in Massachusetts and the nation.
Underwater warningsNegative equity loans a barometer for ,future foreclosures
ForeclosureUpdate
Month-to-month data fromthe Warren Group showsforeclosure activity may beslowing down just a bit. P. 2.
Massachusetts homeprices decline, though notas much as other regions.Greater Boston had thirdslowest decline, trailing Dal-las and Denver. P. 2.
Dedham reaches out tohomeowners who are indanger of losing their homesto foreclosure. P. 3.
Delinquency rates on risk-ier loans continue to behigher among Massachu-L, stts.- borrowers. P.
Foreclosure activity bycommunity zip code showshigh activity in WorcesterCounty. P. 5-7.
Neighborhoods in Law-rence continue= to face high-est concentrate of foreclo-
----:F.. P. 6.
Petitiu: rnp most ongle-famil‘ , ones in fourthquarter. P. 7 .
Three of the 20 zip codes inMassachusetts with the highestpercentage of "underwater"loans are located in Lynn, ac-cording to a Seattle-based realestate service. An underwateror negative equity loan meansthe mortgage exceeds thevalue of the home.
In survey of 127 U.S. metroareas, Zillow.com estimatesthat 18 percent of homes pur-chased between 2004 and2008 had negative equity, com-monly known as underwaterloans. Zillow.com also reportedthat in Massachusetts, the per-cent of underwater loansranged from 13 percent in thePittsfield metro to 28 percent inthe Boston-Cambridge-Quincyme: ro to 40 percent in theWorcester metro. At the zipcode level, Lynn's 01901topped the Massachusetts listat 66 percent
The Zillow report echoes aMarch 3 Banker & Tradesmanreport that said that nearly 18percent of all Massachusetts•;: , ineowner mortgagun are un-
with the highe. ::on-centrat.• • ,percent), L., (65 per-cent) and BR ' .• per-cent). Both the V,•. an- en Groupand Zillow both use proprietaryalgorithms to determine current
Source: Zillow.com .
value and negative equity.While Warren Group data isconsidered more credible thanZillow's, estimating home val-ues is not a perfect scienr .,-
Estimati •: 1,--lber of un-derwater loans be helpful ingouging future foreci(,:--:rire ratesand where high concentrationsof foreclosures may occur.
Massachusetts Foreclosure Monitor, ww 3 .mhp.netTim H. Davis, at '!•-tt -
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Signs that foreclosure filings are slowingWhile year-to-year foreclosurerates reflect a surge in foreclo-sures, month-to-month data in-dicate that foreclosures in Mas-sachusetts may be slowing. Ac-cording to Warren Group data,12,554 foreclosure deeds hadbeen filed in the year endingFebruary 2009 up from 8,613 inthe year ending February 2008,a 46 percent increase. A fore-closure deed is the final step inthe foreclosure process.
In February 2009, 823 foreclo-sure deeds were filed, down 16percent from January and down4.3 percent from February,2008. Also, the Federal Re-serve Bank of Boston reportedthat from Q3 to Q4 2008, Mas-sachusetts foreclosure pro-céedings decreased from 0.7percent to 0.6 percent. The na-tional rate is 1.1 percent.
RealtyTrac ranked Massachu-setts 27th among the states intotal foreclosure activity for 012009. With e 9 percent declinein foreclosure activity from Q42008, Massachusets was oneof 23 states to show a decline.
The news on delinquencies isnot as good. Mortgage BankersAssociation/Haver Analytics 60day + delinquency data showsthat delinquencies continue toincrease .10:- all major loan cate-gories '; 04 2008, with percent of
adjustable —Ht.. delin-UP-1MM 18 pc••:p.pt in
?m pared to 174.)4,.. - ,---0for ti le nation.
B'ource: Federal Reserve Bank o€ Boston andthe Mortgage Bankers Association/HaverAnalytics
Greater Boston, Massachusetts prices dip,although not as much as some regions
In a recent survey of 20
Greater Boston & 20 City CompositeS&P/Case.-Shiller index
January 2001 -February 2009major U.S. cities, BostonYear Over Year Changehome prices continued to
erode, although not as.20% 20 City Compositemuch as other rnaior cit-
ies.10%
According to the latestS&P/Case-Schiller index,Boston showed a 7.2percent decline from -10%
February 2008 to Febru- -20%ary 2009, the third lowestdecline of all the citiessurveyed. Only Dallas (-4.5 percent) any Denver
Source: MHP analyst; cf S&P'Case Shiller data.
.• 5.7 percent) ttnr. Prices
Boston are n• •2003 levels. deoii • in the
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As for iVio.-0....rchusetts as a v., hrle, the Massachusetts Association ofRealtors (MAR) reported that March sales prices declined 19 percent
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—Ma sachusetts Foreclosure Monitor, May, 2009ar,414.31,111i9MASE
Community fo us: Dedham /
Program ies to help neighbors save homes
The limited federal and stateresources allocated to addressforeclosures are focused onareas with the highest concen-tration of foreclosure activity. InMassachusetts, 39 communi-ties have been identified as e'gible for federal funding. But allcommunities are facing moreforeclosures and the town ofDedham has responded with aneffort to help homeowners.
Located just south of Boston,this community of almost24,000 residents was ranked78th in 2008 in foreclosure peti-tions and 57th according to theWarren Group in the proportionof mortgages that were sub-prime or at risk. In addition, re-cent data from Zillow.com esti-mates that 22 percent of thosewho purchased a home from2004 to 2008 have negativehome equity.
While Dedham's foreclosuresituation does not qualify it forfederal funding, it has certainlycaught the attention of townofficials. Selectman Bill Mac-Donald said he knew somethinghad to be done when he lookedat a map and saw evidence offoreclosures all over town.When he took the map to thelocal clergy's monthly meeting,"they were astounded," he said.
What resulted was NeighborsHelping Neighbors, an outreacheffort led by local churches todo outreach and let homeown-ers know about foreclosure pre-vention services. The programhas already held one seminarand plans to do more outreachand trainings for at-risk home-owners.
Judging from the statistics, fu-ture sessions will be needed.As of mid-March, 145 Dedham
properties containing 167 unitsof housing were listed in theCHAPA/Warren Group fore-closed properties database. Forevery 1,000 housing units, 19al'e-TiTtFeTOTeadatire "process:Of these, 52 percent haye h..a petton to foreclose filed, 27percerithavellad_arLanction.scheduled_,_and _2:4er-cent-
- - ria-Ve been foreclosed_a_n_d are
L...0—wRed:by_a..leadinginstitution„Seventy-four percent of theproperties are Single-familyhomes, followed by two-familyhomes (12 percent), condomini-urns (12 percent) and three-family homes (1 percent).
So while Dedham does not facethe same problems of manyurban communities, its foreclo-sure situation has caused localleaders to take action "We wantpeople to realize that they'renot in this alone and that thereis help," said MacDonald.
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Renters and owners are being foreclosed into homelessness - The Boston Globe Page 1 of 2
bostoit ccur THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING
More being foreclosed into homelessness tbston Oloft
By Jenifer B. McKim, Globe Staff I April 22, 2009
Derrick Hughes spent so much energy trying to save his Roxbury home from foreclosure that when sheriffs deputiesfinally evicted him in January he had nowhere to go but his 1998 Chevrolet Blazer.
"I spent the weekend driving around, thinking, 'What am I going to do?'" said Hughes, 56, a UPS driver. "I was runningaround trying to save the house rather than find a place for me."
Hughes, who lived out of his car for two months, is one of an increasing number of Massachusetts residents plungedinto homelessness because of foreclosure, state officials and advocates for the homeless say. The state is housingabout 2,650 families in shelters and motels, a 34 percent increase from last year at this time. About 8 percent blametheir predicament on foreclosure, according to a recent survey by the state Department of Transitional Assistance.Last year, a smaller state survey found about 3 percent of families attributed their homelessness to foreclosure.
"People, families, and individuals have come back to their apartments and have been shown the door," said JohnYazwinski, executive director of Father Bills and Mainspring, a nonprofit in Brockton and Quincy that offers assistanceto the homeless. "There are more and more families from the rental market and people who have never experiencedhomelessness before."
Last year, 12,430 homeowners in the state lost their properties to foreclosure - up 62 percent from 2007 - according toWarren Group, which tracks real estate transactions. About 3,300 foreclosures involved homes with two and threeunits. As a result, tenants are evicted through no fault of their own, and many can't afford the upfront costs necessaryfor another apartment. Displaced tenants and homeowners often move in with family and friends, sometimes movingmultiple times before going to the state for assistance.
The newly homeless can be invisible - too embarrassed about their predicament to tell even friends or colleagues. ABrockton couple, for instance, said they don't tell most people that they have been homeless since last summer. Thecouple and their four children returned to their rented apartment from summer vacation last year to find a foreclosurenotice on the front door, and were ordered to leave within weeks. They had faithfully paid the $1,250 monthly rent anddid not know their landlord was facing foreclosure.
"We had nowhere to go," said Jack, 47, who asked that his last name not be published. "Everything fell apart. Nextthing you know, you're on the street."
The family lived on his salary as a roofer before the eviction, but he couldn't keep his business afloat once they movedto the shelter. "We always thought the homeless was a bum on the street," Jack said. "Now it's the average family."
Lori and Nigel Harper, both 46, also never envisioned losing their home or having to live in a shelter with their 16-year-old daughter.
The Harpers bought their three-bedroom Milton home in 2000 for $210,000, attracted by a sunroom, den, and apicturesque backyard with a small stream. But in 2004, Nigel had a stroke and could no longer work as a privateshuttle driver, Lori Harper said.
Facing foreclosure, the couple signed their home over to a real estate agent who said they could rent it until they hadenough money to buy it back. The couple now believes they were victims of a scam.
The attorney who orchestrated the deal was disbarred in 2007 following allegations he misappropriated funds fromother clients.
In 2007, Nigel Harper had another stroke, and the family's financial problems became insurmountable. "We wereevicted from the house, and we became homeless," she said.
Renters and owners are being foreclosed into homelessness - The Boston Globe Page 2 of 2
Last summer, the couple moved into a state-subsidized Cambridge motel, and in December relocated to EvelynHouse, a shelter in Stoughton.
"My daughter, she cries when she thinks about the life we had, when she thinks of having her own room and abackyard," Lori Harper said.
Government officials and housing advocates say they are stepping up warnings to homeowners about such scams,helping borrowers modify their mortgages, and notifying tenants in foreclosed buildings about their legal rights to stay.
But such efforts came too late for Hughes, the former Roxbury homeowner.
He bought his three-family house for $495,000 four years ago, expecting to cover the mortgage with his $65,000salary as a UPS driver and rent from two units. He lost the house because of a tangle over payments with tenants andoverwhelming maintenance costs.
Lacking enough money for the first and last months' rent as well as the security deposit most landlords require, hecouldn't move directly into an apartment. And because he worried about losing his expensive watch, a laptopcomputer, and iPod, Hughes was wary of going to a shelter.
So he stocked his Chevy Blazer with blankets and pillows and added a baseball bat for protection, parking on streetsin Dorchester and Roxbury at night. He lived out of his car for about two months, sleeping in the back and waking forwork to a cellphone alarm. The worst part was having to curtail visits with his 12-year-old daughter, who used to stayat his house every other weekend.
Today, Hughes rents a room from a family friend. He is still working at UPS but is struggling to save money whilepaying for his room, property storage, and child support.
He even dreams of finding a way to buy back his former home, which is now up for sale. "I want to get settled for meand my daughter," he said. "I can't believe with all the help I had to get into this mess [that] there is no help to get meout of it."
Jenifer B. McKim can be reached at fmckim(aglobe.com .
As the mortgage crisis deepens, neighbOrhoods feel the pain as some homeowners justwalk away
By Katheleen Conti, Globe Staff I October 19, 2008
There's a house down the street from Michael Dohovan's in Lynn that gets specialattention from the neighbors: They take turns taking care of the outside, as ifit were their own:
And in a way, the foreclosed house does belong to the neighbors, for itsappearance helps define the neighborhood, for better or for worse.
"It's shocking that we would have to do this type of thing," said Donovan,Lynn's Inspectional Services chief and building commissioner. "Nobody wants aboarded-up house next to them."
Such are the measures to which residents have resorted, as they grapple with thefinancial and sociological side effects of the nation's subprime mortgage crisisthat has toppled banks and led to the historic government bai-out package.
"It affects the social fabric of a neighborhood, because other real estatevalues have plummeted," said Lynn Mayor Edward J. "Chip" Clancy. "It has aspinoff effect. It isn't just the property itself; it affects the streets, theneighborhoods."
In the hardest-hit communities north of Boston, such as Lynn and Revere,foreclosures are more than doubling the workload of inspectional service andhealth department officials who have to inspect properties, assess fines, searchfor the banks who own the properties, pay the initial costs of cleaning up theproperties, and eventually place liens on them, if it gets that far. The problemis being exacerbated by properties that have been abandoned by their owners evenbefore the foreclosure process.
In Revere, North Shore Road was hardest hit by the walkaway problem, where inmany instances, the banks don't even know the property owners have left, saidNicholas R. Catinazzo, Revere's director of public health and municipalinspections. Usually the city finds out about these properties from concernedneighbors.
From the outside, the high grass and stuffed mailboxes give them away, but thesadder story comes from a peek inside, Catinazzo said.
"A lot of the properties we've been to, they've left furniture and everything. Ican't even gather really why," Catinazzo said. "People call us with sad, sadcases, and you feel bad, and there's nothing you can do."
The city has to issue sanitation fines to make sure no one lives at a reportedabandoned property. If officials get no reply from an owner, the city issues a24-hour order to clean up the property. Depending on its size, cleanup costs canrange between $200 and $2,000, which the city has to pay up front, Catinazzosaid. Although communities often recoup the costs from the banks that take overthe properties, the process can be slow - and for cash-strapped municipalities,painful.
"We've spent $64,000 over the last two years, including board-ups," Catinazzosaid. "We had certain neighborhoods where we've always had problems, but westarted to see problems in more affluent parts of the city - West Revere, MaldenStreet - that's when we noticed this isn't isolated. It's gotten so bad thatwe've almost depleted our funds for cleanup."
In addition to cleanup and board-up fees, Revere also has a vacant building lawthat allows officials to fine between $500 and $3,000 a year to owners who allowtheir properties to remain vacant for a certain period of time. Catinazzo saidthat since the foreclosure crisis, officials from other cities have called himasking how they can implement a similar ordinance. -
Donovan said Lynn is looking into implementing a vacant building fine, but inthe meantime abandoned properties are issued health code violation fines from$50 to $300 a day. Boarding up properties deemed unsafe by the Fire Departmentcan cost the city between $1,000 and $3,000, Donovan said. He is quick to pointout that the problem goes well beyond the financial aspect.
"I've been here four years and it's very bad out there," Donovan said. "A lot ofpeople have walked away from their homes. When it's abandoned, no one cuts thegrass, shovels the sidewalk; it becomes an eyesore and a target for people whowant to steal copper. Then we have the problems with vagrants and homelesspeople moving into the houses."
"This has been the worst year I've ever worked here, in terms of abandonedproperty, illegal apartments, illegal rooming houses," Catinazzo said, addingthat Revere's vacant homes are also becoming a target of copper thieves. "But ifyou start boarding up all of them, it starts to look like a ghetto."
In Chelsea, Cottage Street residents are living with the effects of foreclosureand are afraid the area will revert to its crime-ridden past, said Ann Houston,executive director of Chelsea Neighborhood Developers. Houston estimates that 22percent of Cottage Street properties are in foreclosure.
"There's been gang activity, a rise in graffiti, and a sense that theneighborhood is flipping back," Houston said. "Chelsea has made so much progressin the past 10 years, so what people fear is that this rise in foreclosures isgoing to make them lose ground."
Chelsea Neighborhood Developers is a nonprofit community development corporationthat is looking into the possibility of acquiring some of the foreclosedproperties, fixing them up, and either selling or renting them, Houston said.Many Chelsea renters have also become displaced victims of foreclosure, as manylandlords have walked away without warning, she said.
The combination of foreclosed or abandoned properties and increasing crime"takes the heart out of the community," said Paul A. Green, a sociologyprofessor at Salem State College.
"There's the broken window syndrome, where if there's one window in a housethat's broken, the other ones will be, too. It has a depressive impact not justfor the value of my house, but for neighborhoods, because nobody wants to walkdown an abandoned neighborhood," Green said. "It has a degenerative andfragmenting effect on a community - the social decay that goes on when aproperty is abandoned."
Revere Mayor Thomas G. Ambrosino said foreclosures and abandoned properties haveresulted in significant drops in the city's property values.
"It's a real problem for people who live in our city," Ambrosino said. "I don'tknow of a community that's not going through this. I think the whole marketdownturn is having psychological effect on the nation."
Unfortunately, Green said, there is no quick fix for communities, financially orsociologically.
"This bubble has burst and it's going to take some time for us to clean thisup," he said. "It's an incredible amount of anxiety that people are feeling.People are feeling a kind of panic and they don't know where to turn."
Massachusetts Alliance Against Predatory Lendingwww.maapLinfo
AN ACT TO PROTECT TENANTSFROM EVICTION IN FORECLOSED PROPERTIES
WHAT WILL THIS BILL DO?
3 This bill would deter unnecessary evictions and stabilize communities during thecurrent foreclosure crisis.
3 Under this bill, institutional foreclosing lenders would not be able to evict tenants(of all types) in foreclosed property unless they had a good reason to do so.
3 This bill would only apply to institutional lenders and not to subsequent buyers whopurchase foreclosed properties at the foreclosure sale or after.
3 This bill is time limited — it would expire on December 31, 2013.
UNDER WHAT CIRCUMSTANCES COULD A FORECLOSING ENTITY EVICT A TENANT
UNDER THIS BILL?
A foreclosing lender could evict a tenant, including at tenant-at-sufferance (former homeowner),in certain circumstances, including the following:
n A binding purchase and sale agreement with a prospective owner-occupant requires thatthat portions or all of the property be vacant
n Non-payment of agreed-upon rentn Criminal behaviorn Refusing access to the owner, and similar violations of standard tenancy obligations
WHY IS THIS BILL NEEDED?
Under current law, the foreclosing owner does not need to have any justification to evict —simply wanting the resident out is sufficient.' The human cost of these mass evictions is heavy asformer renters who paid rent and satisfied their tenancy obligations, and former homeownerswho are willing to do so, turn to homeless shelters, find it harder to rent elsewhere, and suffer allthe destabilizing effects Of forced dislocation.
3 In the first 11 months of 2008, 21,000 foreclosure petitions were filed across the state.3 These petitions could result in as many as 30,000 households being evicted.3 Massachusetts will face $2.8 billion lost in property values (half of which is in properties
not directly involved in the foreclosure cycle) and $58.9 billion lost in household, wealthin Massachusetts alone by end of 2009.
I One exception is that a foreclosing owner must generally have good cause to evict a Section 8 tenant.
HAVEN'T WE ALRADY PASSED LEGISLATION PROTECTING TENANTS INFORECLOSED BUILDINGS?In November 2007 the Legislature passed Chapter 206 of the Acts of 2007 to stern the tidal waveof residential foreclosures hitting the state. Chapter 206 was aimed primarily at preventing futurepredatory lending schemes and funding pre-foreclosure assistance for owners. Chapter 206 alsoincludes two provisions clarifying that tenancies survive foreclosure, meaning that theforeclosing owners become landlords of remaining tenants. While these requirements haveproven helpful for those renters lucky enough to have legal representation in foreclosureevictions, they do not sufficiently address the mass evictions that are still going on. This bill builds upon and fills in gaps left by the tenant provisions in Chapter 206.
Also filed are three other bills: An Act to Protect Tenants from Eviction in Foreclosed Properties, An ActRelative to a Temporary Moratorium on Foreclosures, and An Act to Require Judicial Foreclosures.
DO ANY OTHER STATES HAVE EVICTION PROTECTIONS SUCH AS THESE?Yes! This bill is modeled on similar laws from New Jersey, New Hampshire, Connecticut andthe District of Columbia. And Fannie Mae has recently agreed to let paying tenants remain intheir homes after foreclosure, but other foreclosing lenders continue to quickly evict all tenants(including former owners who become tenants-at-sufferance after foreclosure).
SOME USEFUL STATISTICS:The need for a bill to allow lawful and responsible tenants of all types to remain in their homesafter foreclosure is pressing:
Across the state 11,486 foreclosure deeds on single and multifamily properties were filedduring the first 11 months of 2008, up 65 percent from the 6,970 deeds recorded duringthe same period in 2007. These foreclosures will likely result in the eviction of almost15,000 households across the state.
Courts report a heavy increase in eviction cases due to foreclosure evictions of tenantsand homeowners. Between January 17 and February 29, 2008, 369 summary process(eviction) cases were listed for trial in the Lynn and Lawrence sessions of the NortheastHousing Court. Of these, 104, almost one-third, were filed by institutional lenders.
• And the suburbs, most with high shares of single family homes, are being hit harder asthe foreclosure crisis spreads, Of the 762 foreclosure deeds recorded in the MiddlesexNorth Registry of Deeds between January 1, 2007 and June 30, 2008, 38% were from thenine suburbs near Lowell (Billerica, Carlisle, Chelmsford, Dracut, Dunstable,Tewksbury, Tyngsborough, Westford and Wilmington).
MAAPL MEMBERS/SUPPORTING ORGANIZATIONS: Action for Boston Community Development, Inc., Association for Community Organizing forReform Now (ACORN), Action for Regional Equity, ARISE for Social Justice, Arlington Community Trabajando, Boston Tenants Coalition,Brazilian Women's Group, Carpenters Local 40, Carpenters Local 107, Charles Hamilton Houston Institute For Race & Justice, ChelseaCollaborative, Chinese Progressive Association, City Life/Vida Urbana, Coalition for Social Justice, Community Economic Development Ctr ofS.E. M4, Community Labor United, Democratic Socialists of America, Dorchester People for Peace, Era Key Realty Services, ESAC, FairHousing Center of Greater Boston, Greater Boston Legal Services, Greater Four Corners Action Coalition, Green-Rainbow Party of MA,Harvard Legal Aid Bureau, Homeowner Options for MA Elders, Jewish Alliance for Law and Social Action, Lawrence Community Works,Lawyers' Committee for Civil Rights Under Law, Mass Advocates for Children, Mass AFL-CIO, Mass Coalition for the Homeless, MassCommunity Action Network, Massachusetts Fair Housing Center, Mass Jobs With Justice, Mass Law Reform Institute, Mass Welfare RightsUnion, Merrimack Valley Labor Council, NAACP N.E. Area Council, National Community Reinvestment Coalition, National Consumer LawCenter, National Lawyers Guild, Neighbor-to-Neighbor, Neighborhood Legal Services, North Shore Labor Council, lOiste?, Organization for aNew Equality, Painters District Council 35, Pleasant St. Neighborhood Network Center, Southbridge Community Connections, Survivors Inc.,Tri-City Community Action Program, UE Northeast Region, Union of Minority Neighborhoods, United Auto Workers Mass CAP, United Food &Commercial Workers 1445, United For a Fair Economy, United Steel Workers Local 5696, Volunteer Lawyers Project.
FACTSHEET on the Tenant Protection Bill & Existing Massachusetts Law
All tenants in Massachusetts have certain protections, such as the right to a habitable dwellingand the right to court proceedings before an eviction. In particular, a landlord can only evict atenant after providing a proper notice to quit that identifies the tenant and after presenting its casefor eviction before a judge. Outside of this process, no tenant may be locked out or forced tovacate by the termination of heat, water, or other necessary services;.
Additional rights and responsibilities of tenants and landlords may differ depending on the typeof tenancy. Types of tenancies include
n Subsidized and unsubsidized tenants with leasesn Tenants at will• Tenants at sufferance (the status retained by an owner-occupant and other household
members after a foreclosure) .
In December, 2007, the Legislature passed An Act Protecting and Preserving Homeownership.Sections 8 and 9 of that law provide generally that:
• An unsubsidized lease tenancy becomes a tenancy at will after foreclosure▪ Tenancies at will and subsidized tenancies are not altered by foreclosure
In essence, the year the Legislature decided that when lenders foreclose on occupied properties,tenancies continue and the lender becomes the landlord of the original tenants.
Since foreclosing lenders assume landlord status once they take ownership of a property and alllegitimate occupants remain as tenants after foreclosure, the proposed Tenant Protections billdoes not change that fundamental relationship described in Chapter 206. Under current law forall landlords, a post-foreclosure owner must maintain a building to code, including providingnecessary utilities. If it wishes to evict a tenant, it must establish the identity of the tenant (of alltypes) and evict through a court proceeding.
The Tenant Protection Bill instead addresses the reasons why lenders who purchase foreclosedproperty can evict in court. Right now, they may evict post-foreclosure tenants at will and putthousands of households out on the street for absolutely no reason — leaving properties vacantand open to all the problems that have been so widely reported. To fight this problem, theTenant Protection bill builds on existing law by allowing legally-defined tenants to remain inforeclosed properties held by foreclosing entities so long as they fulfill their responsibilities astenants (by paying reasonable rent, maintaining the property, not engaging in illegal behavior,etc...). Notably, these protections are eliminated once the property is purchased by a new non-institutional owner OR if a signed purchase and sale agreement requires the vacancy of a portionor all of the building.
This bill requires promotes the best interests of foreclosing entities, of tenants, and of the entireCommonwealth. If foreclosing entities wish to maintain the value of their properties and avoidthe financial impacts of neglect, abandonment, degradation by natural causes, vagrancy and theft,they should extend existing tenancies and keep their buildings occupied. Fannie Mae has alreadyannounced a similar policy allowing tenants to pay rent and remain in their foreclosed homespending sale to new owners. In addition to the irreplaceable property maintenance provided by astable tenancy, the foreclosing owner would receive a source of steady income and help furtherstabilize the neighborhood counteracting some of the downward pressure on neighborhoodproperty values.
This bill will enable paying tenants to stay in their homes when a lender takes back a property throughforeclosure. Lender-landlords will not be able to evict tenants (tenants, tenants-at-will, tenants-at-sufferance)who pay rent and abide by the standard rules of tenancies until they have a new owner-occupant buyer who asa condition of purchase requires units to be vacated. Foreclosed properties currently average almost 12months on the market before re-sale. Our municipalities are burdened to cope with numerous vacant andunsupervised properties, degrading neighborhoods and damaging property values. Buildings left vacant formonths are targets for catastrophes such as burst pipes fire, vandalism, and disrepair due to neglect. This billwill keep people in their homes and help to stabilize neighborhoods during the current crisis.
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This amendment to the foreclosure law will enable Massachusetts to join with most other states (including NewYork, Connecticut, South Carolina, and Kentucky) in requiring that a court approve foreclosures for owner-occupants of 1 to 4 family homes. Currently, even if a lender violates the law or makes an error in the amountowed, borrowers have no right to have a judge rule on whether a foreclosure is warranted. Massachusetts, aleader in protections for tenants, should provide equal judicial process for homeowners in danger of losing theirhomes. Many borrowers got mortgages through now defunct brokers. They must deal with large, out of statecompanies and hopeless bureaucracies, unable to find anyone authorized or willing to renegotiate their loan.
170-ipoiAkyNfoi-a.06-tiiiiOlit:Fiii7e6lOgl.fre
eacI,SPOn:or::Aepr6enr*i..y. se Unfigi.14;'Ser*Ofi,Mon4gliy: 5,T:p7S)3.j ,.-..This bill provides a 6-month moratorium on foreclosures of sub-prime and other "creative" mortgages that arepresumptively unfair. It keeps homeowners from losing their homes and mandates good faith negotiations bylenders while more comprehensive solutions are affected on either the federal or state level. Foreclosures notonly devastate borrowers who lose their homes but entire communities. They lead to lower property values,abandoned homes, less tax revenue, higher crime rates and general destabilization of our neighborhoods. Themoratorium will apply to loans which unfairly lured borrowers with low introductory 'rates that increase
. dramatically; with principles at 97% or more of house's value; with substantial pre-payment penalties; that areinterest only; or with high points, fees or interest in violation of existing predatory loan law. In 1991, theMassachusetts Legislature passed a moratorium to help victims of home improvement loan scams. New Yorkand New Jersey are among states now considering foreclosure moratoriums.
.6. --A:ehiiiettSiii-01.6siiii-e:WdiatiOri rcigi,a.int:.taa -sodi'-isVi:.. efili'geritaii:vr'e,Ped6iie':,HB4003This amendment would provide that the mortgagor be offered the opportunity to participate in a court-supervised Foreclosure. Mediation Program. In that program the mortgagor will have the opportunity tonegotiate an agreement with the mortgagee. A foreclosure shall only be allowed to be initiated if a good faitheffort has been made by the lender to review the borrower's financial situation and if feasible provide a loanmodification or other option to assist the borrower. Such mediation programs have dramatically decreasedforeclosures and lowered court case loads and costs in Philadelphia and a few other areas.
MAAPL MEmBERs/SUPPORTING ORGANIZATIONS: Action for Boston Community Development, Inc., Association for Community Organizing forReform Now (ACORN), Action for Regional Equity, ARISE for Social Justice, Arlington Community Trabajando, Boston Tenants Coalition,Brazilian Women's Group, Carpenters Local 40, Carpenters Local 107, Charles Hamilton Houston Institute For Race & Justice, ChelseaCollaborative, Chinese Progressive Association, City Life/Vida Urbana, Coalition for Social Justice, Community Economic Development Ctr ofS.E. MA, Community Labor United, Democratic Socialists of America, Dorchester People for Peace, Era Key Realty Services, ESAC, FairHousing Center of Greater Boston, Greater Boston Legal Services, Greater Four Corners Action Coalition, Green-Rainbow Party of MA,Harvard Legal Aid Bureau, Homeowner Options for MA Elders, Jewish Alliance for Law and Social Action, Lawrence Community Works,Lawyers' Committee for Civil Rights Under Law, Mass Advocates for Children, Mass AFL-CIO, Mass Coalition for the Homeless, MassCommunity Action Network, Massachusetts Fair Housing Center, Mass Jobs With Justice, Mass Law Reform Institute, Mass Welfare RightsUnion, Merrimack Valley Labor Council, NAACP N.E. Area Council, National Community Reinvestment Coalition, National Consumer LawCenter, National Lawyers Guild, Neighbor-to-Neighbor, Neighborhood Legal Services, North Shore Labor Council, e Oiste?, Organization for aNew Equality, Painters District Council 35, Pleasant St. Neighborhood Network Center, Southbridge Community Connections, Survivors Inc.,Tri-City Community Action Program, UE Northeast Region, Union of Minority Neighborhoods, United Auto Workers Mass CAP, United Food &Commercial Workers 1445, United Fora Fair Economy, United Steel Workers Local 5696, Volunteer' Lawyers Project.
