Thousands Of Massachusetts Homes Hit By Foreclosure Crisis In 2007

Posted on January 24th, 2008 by saman

7,563 homes were foreclosed by mortgage companies in
Massachusetts last year. The figure rising to almost nine three times than that of last year and nine times as compares to the year previous to that.

Warren Group, a publisher of data and news relating to real estate, compiled figures showing that this was the highest number of foreclosures in a year since the last lengthened decline in housing prices in the early 1990’s.

As a result of foreclosed houses being sold at discounted prices by mortgage companies, analysts expect housing prices to fall throughout the year and expect this year to be even worse. They estimate that homeowners will face increased mortgage payments as a result of rising interest rates.

The pressure on the lending industry to reduce monthly payments on loans and help troubled borrowers to avoid foreclosure is increasing but the head of the Federal Deposit Insurance Corp, Sheila Blair, said in a conference in
New York that the voluntary efforts being made by the industry are moving too slowly. She insisted that lenders needed to pickup pace or the government might step in. Most politicians favor spending public money to help save homes facing foreclosure but the Bush administration has not voiced support for this idea.

The lending industry, on the other had, has defended itself with the Mortgage Bankers Association reporting that 236,000 borrowers were granted some breathing space by mortgage companies nationwide between July and September last year. However, only 53,600 of these actually received a reduction in monthly payments where as most of the others got a repayment plan and still had to make regular payments with the only difference being that they were allowed to defer their penalty fees and missed payments till the end of the loan.

Hope Now Alliance, another industry group, released a preliminary report which said that the number of loans that had been modified tripled in the last three months on 2007. The group’s executive director claimed that the number of troubled borrowers being helped is rapidly gathering speed.

But housing advocates claim otherwise saying that people who can’t afford their payments won’t be helped by deferring their repayments and that modification only helps if the payment is adequately reduced. The report said that almost 29 percent of homeowners that faced foreclosure in 2007 were those who had previously received assistance.

It was reported by the Mortgage Bankers Association that 917 borrowers from Massachusetts had received a reduction in their loan payment between July and September and 3,252 had been given a repayment plan but during this three month period a foreclosure action was initiated against 7,467 homeowners in the state, 29 percent of whom had previously received assistance from a lender.

The high number of foreclosures last year requires an urgent action to be taken to help homeowners facing borrowing problems and to keep them in their homes ensuring the stability of community. An administration spokeswoman claimed that they looked forward to working with lenders to find the solution to this national problem.