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New Massachusetts Foreclosure Protection Law Signed into Force

Massachusetts homeowners facing foreclosure and tenants in foreclosed apartment buildings will get extra protections under a bill signed into law Saturday by Gov. Deval Patrick.

Patrick signed the law at a single family home in Brockton that was foreclosed on but then rehabilitated by a local affordable housing agency and placed on the market.

“Even as Massachusetts continues its economic recovery, thousands of families are still dealing with the effects of foreclosure and they need immediate assistance,” Patrick said in a press release. “Combined with the 2007 comprehensive foreclosure law, we are redoubling our efforts to address the foreclosure crisis.”

The new law bars bankers and lenders from issuing wholesale eviction notices to tenants in foreclosed buildings. Under the law, tenants can only be evicted for just cause, like not paying their rent on time or other violations of their lease.

For homeowners, the new law temporarily extends an existing 90-day cooling off period designed to give property owners and their lenders time to negotiate new terms to a mortgage to help avoid a foreclosure. The new law extends the period to 150 days.

The cooling off period can be reduced back to 90 days if the lender makes a good-faith effort to work out a reasonable alternative to foreclosure.

In an effort to protect older homeowners, the new law requires those who want to obtain a reverse mortgage on their home to meet with a counselor approved by the Executive Office of Elder Affairs. It also criminalizes residential mortgage fraud.

Housing advocates have long pushed for the added safeguards, especially for tenants, who often find themselves caught between a landlord facing foreclosure and a bank that wants to empty a building of existing tenants to make it easier to resell.

Without the new law, tenants could be evicted by a bank even if they had a lease and had been paying their rent on time, according to Lew Finfer of the Massachusetts Communities Action Network, a group of community improvement organizations.

“A lot of tenants immediately get a notice saying we want you out,” he said. “It’s a huge hardship to have to move and pay a new rent and a security deposit.”

Bankers and real estate agents say the bill is much improved, compared to an earlier version which they said would have stripped away too many of their rights.

Gregory Vasil, the CEO of the Greater Boston Real Estate Board said once a building is foreclosed on, the goal is to get it back on the market and into productive use as soon as possible.

“Nobody wants them to sit vacant,” he said.

He said the final version of the bill would still allow a building owner who is facing foreclosure, but is able to negotiate a purchase and sale agreement with a new buyer, to evict tenants. But once the lender or bank takes control of the property, tenants could not be evicted.

Local banks have been closely monitoring the new law’s requirements, including a provision that gives property owners up to 150 days to negotiate new terms of a mortgage, according to Jon Skarin, director of federal policy for Mass Bankers Association.

“Because many of the provisions (of the law) kick in immediately, it is going to cause some confusion in the market,” said Skarin. “Our members have been scrambling to try to comply with the law.”

Lawmakers said the legislation was designed not just to help individual homeowners and tenants, but to fend off blight that can come from too many foreclosed properties in a single area.

“When a property lays vacant and abandoned it is an invitation to drug addicts and vandals, and can be a general eyesore to a whole neighborhood,” said House Committee on Ways and Means Chairman Charles Murphy, D-Burlington.

The bill also creates a new property tax exemption that lets a charitable organization that acquires a foreclosed property — and plans to create low and moderate income affordable housing there — to be exempt from property taxes until it rents or leases the property.

The exemption would expire seven years after purchase.

The new law comes as the state continues to struggle with high numbers of foreclosures.

There were 1,313 foreclosure deeds recorded in Massachusetts last month, compared with 628 in June 2009, according to The Warren Group, an independent publisher of real estate data.

Increasing Foreclosures in Mass Starting to Strain Economy

Many economists say the U.S. won’t fully recover from the recession until the housing market recovers. But the number of homeowners facing foreclosure continues to rise.

And as NPR’s Anthony Brooks reports, the foreclosure crisis is now deepening in states like Massachusetts, places that were initially spared the worst of the real estate collapse.

ANTHONY BROOKS: Paul Collier is an attorney in Cambridge, Massachusetts, who represents homeowners facing foreclosure. Collier says these days he’s busier than ever.

Mr. PAUL COLLIER (Attorney): The financial conditions that created this meltdown and the legal conditions that created the meltdown are still there.

BROOKS: Last month, banks took more than 1,300 Massachusetts homes – more than double the rate of the same period last year. That, according to Timothy Warren, CEO of the Warren Group, who tracks real estate in Massachusetts.

Mr. TIMOTHY WARREN (CEO, Warren Group): Foreclosures are at high levels right now. People are entering foreclosure at a very high rate. And, you know, that indicates a certain level of economic distress and that we’re probably going to be facing that for some period of time.

BROOKS: The historically high foreclosure rates are due in part to banks working extra hard to get those non-performing loans off their books. In other words, they want to close out the bad loans and resell the homes to people who can afford them.

Beyond that, Aaron Gornstein, who heads an affordable housing advocacy group in Boston, says the unemployment rate remains stubbornly high.

Mr. AARON GORNSTEIN (Director, Citizens’ Housing and. Planning Association): People are losing their jobs or have reduced work hours. We have a lot of people in the construction trades that are unemployed – close to 40 percent. So those people are falling behind on their mortgage. They can’t keep up and, as a result, they’re going into foreclosure.

BROOKS: Joel Searby agrees and says the high foreclosure rate has more to do with the tough economy than with the fallout from the subprime mortgage crisis. Searby is with a Florida research company that polled 500 Pennsylvanians who lost their homes to foreclosure, and asked them why.

Mr. JOEL SEARBY (Pollster, Strategic Guidance Systems): Forty-one percent had a prime, fixed-rate loan, while only eight percent had a subprime adjustable loan. The most significant finding is that those experiencing foreclosure experience job loss in a combination. That is, they didn’t just simply lose their job, they lost their job and then something else happened.

BROOKS: Something like medical bills, divorce or a relative moving in. He says the message is that foreclosures are tied more closely to bad economic conditions than to the type of loan. Searby says he found the same results in Florida and Nevada, two states hit the hardest by the real estate crisis.

According to a recent RealtyTrac report, in the first half of this year, the number of foreclosures went up in three-quarters of the largest U.S. metropolitan areas, compared with a year ago.

Mr. COLLIER: And until we do something about it we are going to be unable to resolve the current economic crisis.

BROOKS: Again, Cambridge attorney Paul Collier. He says foreclosures not only hurt millions of individual homeowners, they destabilize neighborhoods and drag down housing prices.

Collier says federal initiatives that encourage banks to rework loans and avoid foreclosures are too weak because they’re basically voluntary. But he says it doesn’t have to be that way. Collier points out that in the wake of the 1930s Depression, some states enacted tough measures to compel banks to lower monthly payments, and that dramatically reduced foreclosures.

Mr. COLLIER: States like Kansas and Iowa simply adopted mandatory mediation. That is, every lender had to sit in a room with a professional mediator and a homeowner and discuss modification of that loan. And foreclosures went down within 20 months of the passage of that bill by 94 percent.

BROOKS: In the absence of that kind of legislation, it might help if more Americans facing foreclosure knew about state and federal programs that could help them, programs that provide incentives to rework loans and lower monthly payments.

But Joel Searby – who did the polling on those facing foreclosure in Pennsylvania – found that a majority of those surveyed didn’t know how or where to get help.

Mr. SEARBY: There’s no doubt that there’s been a disconnect between what the federal government and state governments have been offering and what these folks who are experiencing foreclosure are needing.

BROOKS: So until that changes or until the economy dramatically improves, the number of foreclosures will likely continue to rise in the months ahead.

Anthony Brooks, NPR News.

Worcester County Massachusetts Foreclosure in Warren MA

Shamrock Dr

Warren, MA 01083

3 Bd | 1 Ba | 2,304 Sq. Ft. | Single Family

Foreclosure Status: Foreclosure Auction (NFS)

County Worcester CountyType Single Family ResidenceBeds 3Baths 1Square Feet 2304Lot Size 18100

County	Worcester County
		Type	Single Family Residence
		Beds	3
		Baths	1
		Square Feet	2304
		Lot Size	18100

Foreclosures in Massachusetts Show No Signs of Abating

The number of Bay State foreclosures started by lenders fell in June, but finished foreclosures more than doubled from a year ago, according to a Boston-based real estate tracker.

“The foreclosure picture in Massachusetts hasn’t really improved that much,” said Timothy Warren, head of the Warren Group.

Lenders filed 2,220 petitions to foreclose – the first step in the foreclosure process – last month, a nearly 22 percent drop from a year earlier. But foreclosure petitions increased 5 percent in June from 2,110 in May.

“The level of foreclosure starts for the first half of the year is only slightly lower than a year ago,” said Warren.

“We have been averaging just over 2,200 foreclosure petitions a month this year compared to about 2,300 a month last year.”

While the number of foreclosures initiated in June declined, the number of completed foreclosures more than doubled from a year earlier. A total of 1,313 foreclosure deeds – the final step in seizing a home – were recorded, a 109 percent jump from 628 in June 2009.

Foreclosure deeds surged in every county in the Bay State except Nantucket in June.

Avon Massachusetts Foreclosure Auction: JULY 29, 2010 – 10:00 A.M.

151 E. High Street

Avon, MA. 02322

• 1 Family

• 2 Bedrooms

• 1 Full Bath

• GLA = 1,008 Sq. Ft.

• Lot = .72 acres

• Heat – Forced hot water/Oil

• Exterior – Vinyl siding

• Built in 1920

• Book: 19826

• Page: 279

TERMS: Five Thousand Dollars ($ 5,000) will be required to be paid by certified or bank check at the time and place of sale as earnest money. The balance is to be paid by certified or bank check within thirty (30) days of the date of the sale and shall be deposited in escrow with the Law Office of John E. McCluskey, Esq., P.C. 932 Main Street, Brockton, Massachusetts. A deed will be provided to purchaser for recording upon receipt in fulll of the purchase price. Other terms will be announced at the sale.

Click here for more information:

http://www.callahanre.com/flyer151easthigh.pdf

Massachusetts Near Top of New England Foreclosures

Downtown Boston Foreclosures along Rose Kennedy Greenway Increasing

A second-floor condominium in a luxury building just off the Rose Fitzgerald Kennedy Greenway boasts a gourmet kitchen, golden-colored polished concrete floors, and spectacular views of Boston Harbor. This spring, it gained an undesirable distinction: The 2,600-square-foot condo went into foreclosure.

In fact, half of the units at Greenway Place, a newly renovated 12-unit, eight-story historic building, have gone into foreclosure, at least briefly, over the past two years. Such troubles are unusual in Boston’s downtown market, which has largely been cushioned from the rash of foreclosures that have plagued Massachusetts since home prices starting falling in 2005.

This year, however, foreclosure activity for downtown condos has started to edge upward. Petitions, the first step in the process of a lender taking back a property, have swelled to 46 for during the first five months of the year, compared with 30 during the same period last year, according to Warren Group, a Boston company that tracks real estate data. Petitions have been attached to some of the city’s most deluxe addresses over the past year, including the Residences at the Ritz-Carlton Towers and the Residences at the Intercontinental, according to the Suffolk County Registry of Deeds.

Completed foreclosures occur less frequently but also have increased slightly. Downtown condo owners lost eight properties to foreclosure during the first five months of 2010, compared with six during the same period last year, according to Warren Group. In May, a buyer purchased a foreclosed unit in Folio Boston, a luxury condo complex, for $650,000 — about $275,000 less than it sold for in 2006. Another unit in the Greenway Place was taken back by a lender this month and quickly resold for $699,000.

Whether these foreclosures represent a blip in time or a sign of what’s to come is up to debate, local real estate professionals say.

Kevin Ahearn, president of the Boston marketing and brokerage company Otis & Ahearn, said a bump up in the number of foreclosure petitions on high-end condos is the result of financial troubles among wealthy homeowners that likely will soon ebb because investment portfolios have stabilized. He said sales and prices in the high-end market are on the increase this year.

“It is a delayed reaction,’’ Ahearn said. “You are on an upswing now.’’

Debra Taylor Blair, president of Listing Information Network, a Boston company that tracks downtown real estate, said troubles at Greenway Place are unique to the building — it’s a boutique building on the fringe of the financial district that offers no parking or concierge services. “Fundamentally, I feel the downtown condo market is on rock solid footing,’’ Taylor Blair said.

Other market watchers are not so sure. Jon Gollinger, East Coast chief executive of Accelerated Marketing Partners, a Boston company that runs auctions for high-end buildings nationwide, said Boston’s downtown likely will see more foreclosures as wealthy people struggle with job loss and declining home values.

“It’s inevitable,’’ he said.

Greenway Place, located at 199 State St., across from the Marriott Long Wharf, appears to have had more than its share of troubles. The building was touted by developers in 2005 as a “hidden jewel’’ once overshadowed by the Central Artery. When the thoroughfare was dismantled as part of the Big Dig, the building was converted from office space into deluxe residential units with lofty price tags ranging from $1.3 million to $2.9 million.

But the building’s launch in 2005 coincided with the start of the state’s housing market downfall. Developer Richard Tambone was unable to sell five of the 12 units, and they eventually fell into foreclosure. Several owners stopped paying their condo fees, and lawsuits mounted.

Under financial pressure, Tambone sold three units at auction in 2008 and another in June for $640,000 in a short sale, a process in which the lender agrees to a price less than the mortgage balance. Tambone’s last remaining unit, with an original price tag of $1.8 million, was foreclosed upon by Bank of America Corp. this month and sold days later to a new owner for $699,000, public records show.

Tambone, president of Tambone Investment Group in Burlington, said he was a victim of bad timing as condo values in the area fell precipitously. Despite the problems, he said, he is still “very proud’’ of the building and continues to tout the project on his company’s website. He maintains that unlike some developers who abandoned struggling projects in recent years, he has worked with lenders to sell the remaining units. He said the lawsuits, including one from a lender and another from disgruntled investors, have been settled.

“So many other developers walked away,’’ Tambone said. “You can’t control the economy.’’

Christos Christoudias, a Greenway Place condo trustee, is optimistic about the future of the building, which is surrounded by good restaurants and is within walking distance to the harbor. Christoudias said he bought his unit in 2007 for 25 percent less than the initial asking price. When he moved in, fees were too high and many owners were delinquent in making payments, Christoudias said. The association eliminated the concierge, reduced monthly dues, and started collection procedures against owners who weren’t paying.

“It’s finally all figured out,’’ he said. “Now we have a surplus of condo fees.’’

But another owner, investor Ryan Connelly, is probably not so upbeat about the building. Connelly bought the second-floor unit at a foreclosure auction in 2008 for $901,000, according to the unit deed. Even after making major improvements, including the golden flooring, he has yet to find a buyer, according to listing broker Herion Karbunara. In May, the unit fell back into foreclosure and is now listed for $1.4 million — $1.2 million less than it was marketed for in 2008.

Connelly did not respond to requests for an interview, but Karbunara said the lowered price “breaks his heart.’’

“Once a building gets a bad rap, it’s very hard to clean it up, especially if it’s small,’’ he said. “I feel good about the building. I feel like it turned around.’’

1 Million Homes to Be Repossessed in 2010!

The national foreclosure numbers continue to bounce around a bit, rising here, falling there, but at a very high level.

However, the days of letting troubled homeowners sit in limbo for months or years are long gone.

Banks are moving to seize homes and then unload them on the real estate market. Of course, the timing could not be better, coming just as prices falter and sales plunge with the end of the home buyer tax credit, but that’s a story/rant for another day.

Overall, the pace with which banks are seizing homes is escalating dramatically as we hurtle towards that dubious, 1-million-homes-repossessed milestone.

Bank repossessions jumped 5 percent from the first quarter and are a whopping 38 percent over the second quarter of 2009. The grand tally of 269,062 homes seized set a new quarterly high, RealtyTrac finds.

OK, so how is Massachusetts doing in all this frenzy of foreclosure activity?

Well, not so hot.

It’s easy to fall into the trap of comparing the Bay State with foreclosure disaster zones like Nevada and Arizona. We are not in that league.

But Massachusetts still had nearly 23,000 homes and condos hit with foreclosure filings and actions during the first half of the year. That’s a 24 percent jump from the first half of 2009.

In fact the total number of foreclosure filings in Massachusetts is very close to the numbers seen in New York and Pennsylvania, at more than 24,000 and 27,000 respectively.

Of course, our two fellow Northeastern states are also much larger. Our beloved Bay State, at 6.3 million strong, has less than a third of New York’s population and about half of Pennsylvania’s.

That’s certainly no reason to pat ourselves on the back. Rather, what has gone so wrong here in Massachusetts?

House Foreclosures sell at 30% discount Nationally

Foreclosures accounted for a third of all sales — and sold at a nearly 30% discount — during the first three months of 2010.

According to a new report from RealtyTrac, the marketer of foreclosed properties, 31% of all sales were foreclosures. And homebuyers purchasing those properties paid a whopping 27% less, on average, compared to sales of non-distressed homes.

These foreclosure sales include properties sold in short sales or after a bank repossession, known as REOs in industry terms. It does not include transfers from borrowers to banks, as in a sheriff’s auction.

REOs, those homes already taken back from borrowers, commanded lower prices than short sales and other pre-foreclosures. The average REO sold for 34% less than conventional sales while pre-foreclosures averaged only 15% less.

Part of the reason for the bigger price cut for REOs is that many of them come to the market in poor condition, their previous owners either unable to or unwilling to maintain them.

Beaten-down condos: ‘Deals of lifetime’

Foreclosures have become a dominant feature of many real estate markets, finding willing buyers among young bargain hunters and savvy housing market veterans.

During 2009, more than 1.2 million property sales involved foreclosures. That grew 25% compared with the year before, and 2,500% from 2005.

“That number boggled my mind,” said Rick Sharga, a spokesman for RealtyTrac. “A 2,500% increase over a four-year period surprised even us.”

Foreclosure sales were highest, expectedly in the bubble states. In Nevada, for example, they represented nearly 64% of transactions. And that’s actually an improvement over the 75% of all sales during the first three months of 2009.

Surprisingly, both Massachusetts and Rhode Island had higher incidences of foreclosure sales than did the bubble state of Florida, at 42% vs. 39%.

“Massachusetts and Rhode Island were two of the only Northeastern states that racked up unsustainable price increases during the boom,” pointed out Sharga.

Managing foreclosure inventories

Lenders have been trying to manage their inventories of foreclosed homes to prevent them from flooding the market and dragging down prices.

“It will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration,” said Saccacio.

Sharga said the impact of foreclosure sales on the rest of the homes for sale can be very strong. He cited Nevada, where the price difference between foreclosed properties and conventional sales is very narrow, only 17%.

“That state had such a high incidence of foreclosure sales it managed to depreciate the entire inventory there,” he said

Massachusetts Foreclosure Petitions Decline Year Over Year and Month Over Month

Lenders initiated fewer foreclosures in Massachusetts in May than they did a year ago and in the prior month, according to a new report from The Warren Group, publisher of Banker & Tradesman.

Foreclosures petitions, which mark the first step in the foreclosure process in the Bay State, fell 9.4 percent to 2,110 from 2,329 in May 2009 and were also down 13.2 percent from 2,431 in April. A total of 11,118 petitions to foreclose were filed statewide in the first five months of the year, a 1.3 percent increase from 10,978 during the same period in 2009.

But the number of completed foreclosures more than doubled in May compared to a year earlier. Foreclosure deeds, which are recorded when a property has been foreclosed on, surged 119.7 percent to 1,283 from 584 in May 2009. May foreclosures were down 6.7 percent from the prior month’s 1,375 foreclosure deeds. Year-to-date foreclosure deeds rose 48.4 percent to 6,107 from 4,114 a year earlier.

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