New law creates temporary lull in foreclosures
Foreclosure filings in Massachusetts dropped 89 percent from April to May, but the decline was due to a change in state foreclosure procedures and not a change in market conditions, ForeclosuresMass.com said today.
The reason for the drop was caused by a mandated extension before lenders can take foreclosure action in Massachusetts Land Court, said ForeclosuresMass.com, a provider of local foreclosure data for investors, real estate professionals, and mortgage brokers.
Massachusetts recently enacted a new law to protect home owners, and one of the law's provisions includes a 90-Day “Right To Cure” period after a default on mortgage loans in many cases; previously, the “Right To Cure” period was 30 days, the firm noted. As a result of the new law, which went into effect May 1, lenders must wait an additional 60 days before foreclosure proceedings can begin in Massachusetts Land Court against homeowners who have defaulted on their mortgages, ForeclosuresMass.com said.
The number of Massachusetts foreclosure filings in May was 392, an 89 percent drop from April and an 82 percent drop from May 2007, said ForeclosuresMass.com, which noted that the 3,414 filings in April 2008 set a record.
“We are in the midst of a foreclosure tsunami here in Massachusetts, and this storm is not going away any time soon," Sheila Farragher-Gemma, cofounder of ForeclosuresMass.com, said in a statement. "The new filing requirements have created a situation similar to the eye of a hurricane. It may seem calm now, but the storm will come raging back with even more force in the days ahead. The fact is that nothing has changed in the Massachusetts real estate market. More homeowners than ever before are defaulting on their loans, and we expect that we will return to historic foreclosure filing levels within weeks.”
(By Chris Reidy, Globe staff)
