AG: Foreclosures will hit suburbs, too
Massachusetts Attorney General Martha Coakley today said the home foreclosure crisis is far from over and will spread beyond urban areas to the suburbs.
Coakley was among several speakers at a congressional hearing in Roxbury, during which officials offered a range of solutions, among them a program to help struggling homeowners in a handful of cities.
There have been 1,000 home foreclosures in Boston in the past six months, clustered in minority and low-income neighborhoods, Coakley said.
But "you are going to see foreclosures in some of our middle and more tony communities, and that is going to affect everybody's health and well-being in the market,’’ she said.
US Representative Barney Frank, chairman of the House Financial Services Committee, said federal data show that minority borrowers were more likely to be given subprime loans, even when their income level is equal to white borrowers.
Subprime mortgages are risky for lenders because borrowers often have poor credit. They usually involve high interest rates.
"If you are African-American or Hispanic in this country, and unfortunately particularly in Boston, you are less likely to get a mortgage and if you do get a mortgage, you pay more," said Frank, adding that he will support a federal bill to toughen regulations.
Governor Deval Patrick outlined a plan to have lenders accept less than the full values of their loans, so homeowners could sell at current market prices and pay off the smaller amount in order to avoid foreclosure. He said it would be applied in Boston, Worcester, Springfield, and other cities with high foreclosure rates. An overview of Patrick's was the subject of a page one story in this morning's Boston Globe.
The foreclosure rate is up 76 percent in the past year in Massachusetts, he said.
(AP)
