In hot housing market, the chill of foreclosure

WAYLAND -- The foreclosure auction was in full swing, with bids progressing a steady $500 at a time. A handful of would-be buyers milled around the driveway, talking on cellphones, hoping for a good deal.

The price had climbed to about $364,000 when the owner of the house pulled up in a Volvo -- splashing through puddles in the driveway -- and made an announcement that caught everyone off guard: He had wired money to his mortgage company the previous night, so the house was still his.

''I have proof this auction is not supposed to be going on," Bryan Magliocca Jr. said after the commotion had died down.

An increasing number of homeowners are finding themselves in similar situations, on the brink of losing their homes, and not all are able to find a way out. The number of people undergoing foreclosure has been on the rise across Massachusetts. Foreclosure filings are up across Middlesex, Norfolk, and Worcester counties.

More than 1,400 filings were recorded in those three counties in the first four months of the year, compared with just over 1,100 filings in the same period last year, according to Framingham-based ForeclosuresMass, which collects information on foreclosures for real estate professionals. That's a 27 percent increase.

Statewide, filings are up in 10 of 14 counties. ForeclosuresMass data also showed that foreclosures were up in the first quarter of the year in communities across Boston's western suburbs.

The foreclosure process is set in motion when a homeowner fails to make mortgage payments. When all other options have been exhausted, the bank that holds the mortgage sells the property at auction.

Analysts attribute the rise in foreclosures to several factors, including sky-high housing prices, people buying houses beyond their means, and job loss. Personal misfortunes such as illness, death, or divorce can also be factors.

Kim Corwin of New Leaf Financial Consulting in Northborough said she has seen many clients who have had trouble making ends meet after losing jobs in the high-tech sector. They begin taking out additional loans and building more debt on their credit cards, confident that they will find new jobs.

''They're very hopeful that it's going to get better, and it doesn't," said Corwin, who said she sometimes recommends that clients downsize to smaller houses before they become unable to make their mortgage payments.

More than $121 billion in new mortgages was extended to Massachusetts homeowners in 2003, according to Harvard's Joint Center for Housing Studies. Lenders say they will try to work with homeowners who are having difficulty, but they move quickly once payments have become delinquent. Owners typically have about three months before missed payments escalate into possible foreclosure.

Foreclosure filings do not always result in a person losing a house at auction. Jeremy Shapiro, a founder of ForeclosuresMass, said the resources available to homeowners have cut down on the number of houses that are actually lost. Homeowners often sell or come up with money to save their houses, sometimes at the last minute.

After Magliocca's story was confirmed, the auction at his small house, which he said he has been trying to fix up, was abruptly halted and the bidders departed -- without their deal.

Magliocca, a mechanic who lives with his bulldog Max, had raced to the house when he found out the auction was happening. He told a reporter his troubles began last year when he was in the hospital with a back injury and fell behind on his payments.

A ''For Sale" sign staked on his lawn, Magliocca said he had tried to sell the house, but could not get near his asking price. He now says he has worked out his finances and plans to keep the house and add a second floor.

''I want to prove to people I changed my life," he said. As the auctioneers checked whether he had made the payment, Magliocca scoffed at their presence.

''I would never go to somebody's house and try to take it away," he said.

Analysts say foreclosures can happen to almost anyone.

''In many instances, it's out of their control," said Robert Lavelle, senior vice president at Middlesex Savings Bank in Natick, who emphasized that his bank does what it can to work with homeowners. An emotional attachment to a house can often prevent the owner from heading off trouble.

''It's a very difficult thing for an individual to recognize that there is no other option but to sell their house," Lavelle said.

Stanley Paine, who heads the Newton company that conducted the Wayland auction, said most banks will work with homeowners, but he also noted that the banks ultimately want their money. ''They don't want to be in the real estate business," he said.

As for the business of foreclosure auctions, Paine said, it seems to be doing well, however unfortunate that may be.

''It's a growth industry," he said.

Emily Shartin can be reached at eshartin@globe.com.