Study: Boston Mortgage Problems Increase Fourfold

The number of Boston residents who lost their homes to foreclosure was four times greater last year than in 2005, according to the Boston Globe, and the rate is accelerating this year.

Massachusetts home loan lenders seized 261 residential properties last year from homeowners who fell behind on their monthly payments, up from 60 in 2005, according to the city’s Department of Neighborhood Development.

This year the city is on pace to exceed 2006 numbers: by April 13, there were already 114 foreclosures. The numbers are still lower than the 1,700 foreclosures in Boston in 1992, when the technology-based economy ran aground and some Boston home prices were cut in half.

But Mayor Thomas M. Menino said he is concerned about the current figures, fueled by the rising delinquencies of risky subprime home loans.

“It’s not just a Boston problem. It’s a nationwide problem,” he said. “We need state help. We need federal help.”

Menino’s office is scrambling to introduce programs to help those at risk of losing their homes. Back in October, the Department of Neighborhood Development began rolling out services to refinance high-cost subprime loans or counsel those who have already entered foreclosure.

In May, the city will begin new seminars for homeowners at risk of home loan foreclosure — mailing invitations to all residents who have a subprime loan.

For fiscal 2008, Menino has asked for $950,000 for Massachusetts mortgage foreclosure prevention in the city budget. The mayor has also introduced a bill in the state Legislature that would impose a 60-day freeze on any action by lenders after they file the initial foreclosure notice.

Most Boston foreclosures last year were clustered in four city neighborhoods. Dorchester had the most, 76, followed by Roxbury, 57, Mattapan, 36, and Hyde Park, 26, according to the city report.

Mona Fuller she missed two of their $2,100 payments last fall, and then the lender, GMAC Mortgage, stopped accepting their payments when they did send them.

She said her uncle referred her to the city for help, where a counselor negotiated with the lender to save their house. “You don’t appreciate things until they’re almost gone,” she said.

The foreclosure process is triggered when borrowers are at least 30 days late on a payment. The mortgage lender must notify the state’s Land Court of its intent to foreclose, and typically sends a letter to the borrower.

Not all homeowners who receive notices lose their homes. They can either try to renegotiate the loan or sell the house to pay if off.

But declining home values and a lack of home loan refinancing options have closed off these possibilities for many distressed homeowners.

Continue reading in the Boston Globe …