Big lenders cut foreclosures in Mass. by 40 percent in Nov.
Hundreds of Massachusetts borrowers behind on their mortgages were spared the loss of their homes in November as major lenders conducted 40 percent fewer foreclosures because of growing concerns about their business practices.
Banks seized 416 homes in Massachusetts in November, compared to 702 in the same month in 2009, the lowest recorded number of foreclosures in a one-month period in almost four years, according to Warren Group, a Boston company that tracks real estate.
Moreover, lenders held off initiating many new actions against delinquent borrowers in November, filing 43 percent fewer petitions to foreclose, the first step in the process to seize a home for nonpayment.
Major mortgage lenders such as Bank of America Corp. and JPMorgan Chase & Co. temporarily suspended home seizures this fall after government regulators and investigators raised questions about sloppy procedures and possible fraudulent practices. Some banks conceded that midlevel employees were routinely signing thousands of foreclosure-related documents without even reading them.
A Fitchburg lawyer, James L. O’Connor Jr., said he has many clients who have seen their foreclosure dates postponed over the past few months.
“They are still in their homes,’’ he said. “I can only speculate it has to do with the issues coming out, the problems with the paperwork.’’
But the steep drop in foreclosures does not necessarily mean those homeowners are out of trouble, housing advocates and analysts said. The slowdown may just delay the inevitable for many delinquent borrowers; housing specialists said there is little evidence these homeowners have recovered financially.
“There are many people in holding status,’’ said Virginia Pratt, a foreclosure prevention counselor from the Ecumenical Social Action Committee, a nonprofit group in Jamaica Plain.
Another possible explanation for the drop in home seizures is a new law in Massachusetts that extends the time a lender must wait before commencing most foreclosures to 150 days from 90.
What’s unclear is how long the delays will continue.
JPMorgan Chase resumed foreclosures in some areas in late November, while Bank of America has also restarted them, focusing first on homes that are vacant or not owner-occupied. (Bank of America is, however, suspending seizures and evictions during the holidays.)
Prior to the slowdown, lenders had been seizing homes at a much faster pace, as more homeowners hurt by the recession and long-term unemployment fell behind on their loans. Even accounting for the slowdown, lenders had seized 40 percent more homes in Massachusetts through November, compared to the same period last year, Warren Group said.
Still, the delays might not give delinquent borrowers enough time to get out of trouble.
Melonie Griffiths, a community activist with the Jamaica Plain group City Life/Vida Urbana, said more people are pursuing alternatives to foreclosure, such as requesting banks to modify their loans or to accept a sale of properties at lower prices.
But, Griffiths said, “most of them don’t end up getting that modification.’’
Indeed, nearly 3 million mortgages were eligible for modification under the Obama administration’s Making Home Affordable Program, according to a federal report. But just 550,000 borrowers had gotten permanent help as of November.
Tens of thousands additional eligible borrowers are still awaiting approval for changes in their mortgages.
Bank of America officials said they have improved some of their foreclosure procedures but also determined the basis they used for seizing homes was correct. Furthermore, they said that completing foreclosures is key to reducing the number of troubled properties depressing local housing markets.
Spokesman Rick Simon yesterday said that he expects Bank of America to increase the pace of foreclosures as it works through a backlog of delinquent mortgages. “We haven’t seen improvements in the economy that would let some of the people out of this situation,’’ Simon said.
Meanwhile, lenders remain under the watchful eye of federal and state investigators who are reviewing their records and procedures to determine if they seized homes properly.
Timothy M. Warren Jr., Warren Group’s chief executive, said he expects lenders to react to the pressure by moving more slowly.
“With federal and state governments taking an even closer look at how banks are going about the foreclosure process,’’ Warren said. “I suspect that petitions to foreclose will remain at low levels.’’
Jenifer B. McKim can be reached at jmckim@globe.com. 
