Brockton-area lenders aim to slow foreclosures
Group seeks to help homeowners move to lower-cost loans
Brockton-area banks are banding together to slow a rapid increase in foreclosure filings in their community by refinancing homeowners in danger of foreclosure on their high-cost mortgage loans.
The coalition, which includes banks, credit unions, and government housing agencies, began training yesterday for a program to refinance problem loans with mortgages with attractive terms financed by the Massachusetts Housing Finance Agency. The agency already has made $20 million in similar loans statewide. To advertise the refinancing program, Brockton Interfaith Community, another participant, will distribute flyers in English, Portuguese, Spanish, and French to its members' congregations.
The initiative is a reaction to soaring foreclosure rates in Brockton and across Massachusetts in the wake of a housing boom during which many homeowners took out loans with low introductory payments to buy houses they could not, in the long run, afford.
Brockton homeowners received 298 foreclosure notices from mortgage lenders between January and June 30, up from 120 during the same period in 2004 -- a 148 percent increase in two years, according to ForeclosuresMass.com, which tracks filings in the state's Land Court. That exceeds the 88 percent statewide increase over the two-year period.
``We're headed toward crisis," which could hit ``in the next six months to a year," said Carol DeLorey, who heads an affordable home project for Brockton Interfaith.
A variety of mortgages are causing the financial difficulties -- including adjustable rate, interest only, and no-down-payment loans -- but all had something in common: easy financing with low initial payments that made it possible to buy a house as prices were climbing. Now that interest rates are going up, monthly payments are increasing, causing some homeowners to fall behind.
The coalition's program offers 30-year, fixed-interest rate mortgages, starting at around 6.75 percent, to refinance original mortgages or refinancings, the housing agency said. Households earning up to $110,700, which is 135 percent of Brockton's median income, can qualify; homeowners earning less than 80 percent of the median, or $65,600, would be eligible for a discount on mortgage insurance. Payment protection for borrowers who lose their jobs is included in every loan.
The loans will be available only to borrowers who are not yet facing foreclosure but whose payments are likely to become onerous.
Candido Rodriguez, a department manager at Lowe's in Brockton, the home building supply store, immigrated from Cape Verde in 2001 and purchased a three-family nearby, in Fall River, in 2003. He lives on the first floor and rents the other two apartments. He said the $250,000 financing for his property came in two loans, one of which carried an adjustable rate and the other a 12 percent rate. His monthly payments started at about $1,800 and are now $2,500.
``When I bought, I didn't speak English. I tried to get information but they were never open with me," Rodriguez, 39, said. By refinancing with a 30-year, fixed-rate loan with a coalition member, HarborOne Credit Union, his payments will return to about $1,800.
Brockton lenders are trying to prevent foreclosures, because they do business in the community and because troubled borrowers often are their employees or customers, even though they borrowed from other lenders.
When large numbers of homes are in foreclosure on a street or across a city, ``All of us are affected because it deflates the real estate market," said Stephen Pike, vice president of North Easton Savings Bank, a coalition member.
``More importantly," Pike said, ``there's a human side to each one of those foreclosures."
Other group members are Citizens Bank, Bank of Canton, Crescent Credit Union, Eastern Bank, Rockland Trust, Security Federal Savings Bank, and Sovereign Bank, the housing agency said.
Kimberly Blanton can be reached at blanton@globe.com. 