Cheer up, Massachusetts.
That’s the message of the Patriot Ledger, regarding the current state of the Bay State’s real estate market. While the state has been stuck in a lengthy bust, one expert says that things are good here compared with most of the country.
As record numbers of people lose their homes, Massachusetts Gov. Deval Patrick called Wednesday for the criminalization of mortgage fraud, in addition to better tracking of foreclosures and education campaigns for would-be homeowners.
Two reports issued Monday give hope to Massachusetts mortgage applicants - and home sellers. The price of a Massachusetts single family residence rose 0.1 percent in March, welcome news after a year-to-year price drop of 4.1 percent in February.
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.
A pastor, an attorney and a nurse were among those who lost their homes to a “foreclosure rescue scam” that targeted distressed homeowners, the Boston Herald reported yesterday.
Boston home prices are rising in the region’s fancy neighborhoods, but falling in less-wealthy ones; and experts fear the Hub’s recent murder wave might make the disparity worse.
“I must tell you I’m worried,” said Barry Bluestone, dean of Northeastern University’s School of Social Science, Urban Affairs and Public Policy. “I do fear the violence has reached a point (where) some are going to say, ‘This is where I want to live?’”
First-quarter figures from Multiple Listing Service Property Information Network show big price declines for Dorchester, Mattapan and Roxbury - neighborhoods hard hit by Boston’s 16 murders of the year so far.
Average condo prices plunged 29.3 percent in Roxbury and 7.7 percent in Dorchester.
In Mattapan, condo prices rose 20.7 percent, but experts attribute that to the impact of one relatively pricey rehab project. By contrast, Mattapan’s average house price fell 8.2 percent.
The declines stand in sharp contrast to price gains in Boston’s fanciest neighborhoods.
For instance, average condo prices rose 34.6 percent in Beacon Hill and 1.5 percent in Back Bay.
“It’s a classic ‘Tale of Two Cities,’ ” said mortgage broker John Ford, who sells real estate in upscale neighborhoods. “We are one Boston, but one area is going up while the other is going down.”
Ford and others attribute some areas’ woes to a number of factors, ranging from a generally soft Massachusetts mortgage market to the subprime home loan industry’s abrupt collapse.
But market watchers say the recent string of murders isn’t helping.
“Violence is obviously going to affect supply and demand,” said broker Sam Schneiderman, who had one Dorchester tenant recently move out because of crime fears.
Still, Schneiderman added that most of the murders have occurred in locales buyers “tend to shy away from anyway, because they hear those are the rougher areas.”
Dorchester broker Kenneth Osherow said he’s actually seen an increase in would-be home mortgage loan borrowers recently, although he assumes some house hunters have decided to look elsewhere.
“After what’s gone on, sure, there will be some trepidation - and rightfully so,” Osherow said. “People want safety and quality of life.”
SOURCE: The Boston Herald
Massachusetts Secretary of State William F. Galvin yesterday called for the state Legislature to give the court system oversight over foreclosure cases in the Commonwealth to protect thousands of homeowners who may have been victimized by predatory lenders.
Galvin, Attorney General Martha Coakley and members of Gov. Deval Patrick’s administration urged the State Legislature to toughen the state’s laws around predatory lending and subprime home loans.
The state’s Land Bank recorded 22,000 foreclosure notices last year, a new state record. Studies have blamed much of the problem on subprime (bad credit mortgage loan) lending involving products that are typically made to people with poor credit.
Homeowners pay low rates for the first few years, but then see their monthly Massachusetts mortgage payments skyrocket by hundreds or even thousands of dollars.
Galvin noted it was affecting wide areas of the state, from poorer cities like Lawrence and Lowell to suburban areas like the town of Barnstable.
Bristol County had 1,982 mortgage foreclosure notices from January 31, 2006, to January 31, 2007, a 93.74 percent increase over the same period the previous year.
“My prediction is that it is going to get very bad in Massachusetts, much worse than it is today,” said Sen. Mark C.W. Montigny, D-New Bedford, who has co-sponsored a bill with Sen. Jarrett Barrios, D-Cambridge, to reform the industry.
Richard Walker, a V.P. and community affairs officer at the Federal Reserve Bank of Boston, told the committee the bad credit mortgage problem may get worse this year, as more homeowners become delinquent in their loans.
All foreclosure notices don’t necessarily result in the outright loss of someone’s home. Residents can work out payment plans, sell their home to pay off their outstanding loan, or apply for mortgage refinancing.
But a stagnant Massachusetts housing market has made it much more difficult.
About 30 states require court approval of foreclosures. In Massachusetts, there are no court approvals, just a requirement that foreclosure notices be filed in Land Court.
“Massachusetts’ present foreclosure law does not protect homeowners,” Galvin said. “Indeed, compared to most of the other states, we are in deficit in that.”
The Housing Committee is considering several pieces of legislation that would toughen the laws on mortgage broker and lender organizations and provide counseling and assistance to homeowners.
Continue reading this article at SouthCoastToday.com …
The following editorial on mortgage lending was written by Thomas Callahan, the executive director of the Massachusetts Affordable Housing Alliance. It appeared in the March 27 edition of the Boston Globe …
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Now that everyone is paying attention, let’s review how we got here:
Subprime [bad credit mortgage loans] became the flavor of the day several years ago. The worst kind of lenders preyed on the universal yearning for the American Dream - home ownership - often targeting African-Americans and Latinos with alluring, affordable, and ultimately deceptive sales pitches:
“Your bank says no, we say yes.”
“If your rate is higher than 1.5 percent, then you need to call us now.”
“Bad credit, no problem!”
In Boston in 2005, 70 percent of higher-income African-American and Latino borrowers received a high-cost Massachusetts home loan. That’s a shocking 70 percent of those earning more than $100,000 per year.
Subprime Massachusetts mortgage lending spilled over into the suburbs as well with towns like Weymouth, Holbrook, Dedham, Milford, and others reporting more than 1 in 10 homeowners getting high-cost loans.
These are not just run-of-the-mill high cost loans. Subprime lenders keep coming up with new products and new gimmicks. That is why there has been a proliferation of “stated income” loans and interest-only mortgages.
These products have been around awhile but they had a limited use until mortgage brokers and mortgage companies started selling them to average consumers who didn’t have a realistic chance of paying the mortgage.
No surprise, delinquency rates on these products started rising. One recent report puts subprime delinquencies at more than 14 percent. Investors got nervous and put the squeeze on subprime companies to buy the loans back and, in some cases, cut off the bad credit mortgage funding stream.
It is a recipe for a crisis. And as in any crisis, there is no shortage of proposed solutions. Increased education for borrowers is a starting place that everyone can agree on. Education could inoculate consumers against the persuasive, but deceptive, advertising that fueled the current situation.
Beyond education, legal and legislative remedies have surfaced.
Can the attorney general go after subprime companies or perhaps the Wall Street investors? How about legislation? Debate will now probably focus on proposals to crack down on unfair and deceptive advertising, license loan origination providers, and help consumers caught in the foreclosure process.
Continue reading in the Boston Globe …
One of the most aggressive bad credit mortgage companies making home loans in Massachusetts has announced it is officially quitting the business.
Good riddance, say Massachusetts housing market officials.
“We don’t need companies like Fremont General,” said Thomas Callahan of the Massachusetts Affordable Housing Alliance, upon word that Fremont General Corp. would be selling off its subprime lending portfolio.
The California mortgage company announced yesterday that it’s dumping as much as $4 billion of existing bad credit mortgages, part of a plan to stop making home loans to people with bad credit.
Subprime lenders like Fremont offer high-cost, high-interest mortgages to people with poor or suspect credit.
But Bay State activists have long said that Fremont put many Massachusetts home buyers into mortgages so costly and ill-advised that customers often lost their homes to foreclosure at alarming speed.
Officials in Boston say Fremont financed a shocking 10 percent of the 261 homes auctioned off last year for Massachusetts mortgage payments not being made on time.
That trails only Ameriquest Mortgage as the No. 1 Boston home loan source that ended up in foreclosure auctions.
Fremont spokesman Dan Hilley declined to comment.
Equally happy was Robert Pulster of Jamaica Plain’s Ensuring Stability through Action in Our Communities (ESAC) charged that the company “caused a great deal of pain and suffering in (Boston).”
ESAC, which helps homeowners avoid foreclosure, estimates Fremont wrote about 40 percent of the problem mortgages the group deals with.
SOURCE: Boston Herald
The Massachusetts housing market slowed last month after rising in January for the first time in two years, The Warren Group reported today.
Sales of single-family homes dipped to 2,983, 1.4 percent fewer than in February 2006, as Massachusetts mortgage demand continued to lag and the area’s median price fell to $300,000, 4.6 percent below last year.
In January, 3,305 single-family homes were sold across the Bay State, 5.1 percent more than in January 2006, though their median price was 3.4 percent less than a year earlier.
Meanwhile, sales of condos dipped to 1,717, or 3.2 percent fewer than a year earlier, as the median price fell to $275,000, 4.8 percent below the price in February 2006.
The report shows “a leveling-out in the Massachusetts housing market,” said Timothy Warren Jr., CEO of The Warren Group.
“Sales decreased by double-digit percentages during much of 2006, so a decrease of only 1.4 percent could be an indication of some stabilization in the market. But recent difficulties in the subprime home loan market could spell trouble down the road.”
Especially given the current bad credit mortgage woes, the market, he concluded, “is probably not out of the woods yet.”
Bristol County fared less well, with 262 single-family properties sold last month, 10.9 percent fewer than in February 2006, at a median home price of $285,500, or 3.5 percent below the year-ago level.
Eighty-one condos, which offer more affordable mortgage payments, were sold in the county, 17.4 percent fewer than in February 2006; their median price of $208,500 was 5.7 percent below the year-ago level.
SOURCE: Providence Business Journal