Filings to foreclose set record

With 19,487 cases, state has worst year since '90s recession

Mortgage lenders submitted a record 19,487 foreclosure filings in Massachusetts last year, leaving more homeowners in danger of losing their homes than at any time since the real estate recession of the 1990s.

Housing advocates have said the foreclosure crisis is reaching alarming levels in some areas. The biggest increase in last year's filings occurred in Barnstable County, where Cape Cod's vacation-home market is in a severe slump. Filings in Barnstable County rose 91 percent, to 934 in 2006, according to ForeclosuresMass.com, which released its report yesterday of filings in the state's Land Court.

But the greatest number of filings was in Worcester County -- 2,987, up 76 percent -- followed by Middlesex County. Statewide, filings rose nearly 70 percent, from 11,493 in 2005, with the pace quickening at year end.

Jeremy Shapiro, president of ForeclosuresMass.com, said the data are a clear indication of widespread financial distress. "At the end of the day, we're still talking about over 19,000 people in 2006 whose homes are going into foreclosure," he said.

Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association, said yesterday in a statement that homeownership has increased, due to the greater availability of mortgages. "2003 through 2005 were historic years for [mortgage] production in Massachusetts," his statement said, "and it would correlate to the increased foreclosure results for 2006."

Foreclosure filings statewide, when measured as a share of all mortgages outstanding, remain well below their peak. In early 1992, filings were almost 2 percent of all loans, according to the Mortgage Bankers Association, a lender industry group. In the third quarter of 2006, the most recent figures available, filings were less than 1 percent of loans.

Massachusetts secretary of housing and economic development, Daniel O'Connell, said yesterday the new administration is looking at ways to help ease the growing foreclosure problem by educating home buyers about their loan terms prior to signing mortgage agreements. The administration is weighing additional regulation of the mortgage industry "to call upon the entity writing the mortgage to have requirements for better disclosure," he said.

When borrowers are at least 30 days past due on a mortgage payment, lenders file a notice of intent to foreclose in Land Court. Often, borrowers can negotiate with the lender to catch up on payments or sell the house to pay the loan off. About two-thirds of homeowners who receive the notices are never actually foreclosed on, but that varies depending on the condition of the housing market.

"When the market was hot, hot, hot, if you were facing foreclosure, you could sell at a discount" and still pay off the mortgage, Shapiro said. "Now, putting your property on the market, it can't sell fast enough or for the amount of money you need to settle that foreclosure."

Bruce Marks, a former housing activist and now chief executive of Neighborhood Assistance Corp. of America, a nonprofit that makes home-purchase loans to moderate-income people at a fixed, 5.5 percent rate, said he is swamped with borrowers on the brink of delinquency.

Many have subprime loans, a recently popular financing tool for people that provides credit to customers with low credit ratings by charging a higher interest to compensate for the risk. They get into trouble, he said, when their interest rates rise, after the low introductory rate expires, adding hundreds to the monthly payments. "After two years, an affordable, introductory rate becomes unaffordable, and they're panicked," he said.

Marks said state and federal officials have not given adequate attention to foreclosures. "The regulators have been absent in taking on that issue," he said.

Kimberly Blanton can be reached at blanton@globe.com.