Foreclosure filings set record in 2006
Foreclosure filings by Massachusetts mortgage lenders last year reached a record level, as 19,487 of the state's homeowners were in financial distress and in danger of losing their home.
ForeclosuresMass.com, which reports monthly on the foreclosure filings in the state's Land Court, said filings increased nearly 70 percent from 2005, and that the pace accelerated at the end of last year. In the final quarter of last year, there were twice as many filings -- 6,525 -- as in the same period in 2005.
“2006 was a terrible year for thousands of Massachusetts homeowners. More families faced foreclosure than any other time in our history,” said Jeremy Shapiro, president and co-founder of ForeclosuresMass.com.
The number of foreclosure filings in 2006 topped the mark set in 1991, when a real estate market crash led to 17,000 filings.
Barnstable County, where the vacation-home market has been very weak, had the biggest spike in foreclosure filings: 91 percent. Bristol County was second, with a rise of 87 percent, then Essex County with a 72 percent increase.
Foreclosure filings do not mean the imminent loss of property for a homeowner; lenders file when a homeowners fall behind on their payments at least 30 days. Once they receive notice from a bank or mortgage company, homeowners may be able to work out a refinancing plan with their financial institution or sell the home and pay off the loan, averting foreclosure.
Shapiro blamed subprime mortgages, which are tailored to borrowers with poor credit, and "exotic" mortgages, with low initial payments that allowed people to buy homes they may not have been able to afford, for the sharp rise.
"There's no doubt we have a slumping housing market in Massachusetts right now," Shapiro said. "If you can't afford to pay your mortgage, putting your house" up for sale, he said, "isn't a solution."
(By Kimberly Blanton, Globe staff)
For previous Globe coverage on the housing slump, click here.