Benigna Alarcon hoped that reducing her mortgage payment by $700 per month would be enough to save her Chelsea home from foreclosure.
But she still can't afford the $1,971 payment. Now two months behind on payments, Alarcon said she must either sell her home or risk foreclosure.
"I don't want to lose my house," said Alarcon, 50, an immigrant from El Salvador who is the co-owner of a local restaurant. "I spent everything I had [saved] to buy it."
Alarcon's dilemma is shared by hundreds of local homeowners. Foreclosures tripled across the North region in 2007, rising to 1,040 last year from 361 in 2006, according to data prepared by The Warren Group, a Boston publisher of Banker and Tradesman, a real estate trade journal.
Hardest hit are cities such as Chelsea, Haverhill, and Lynn, where the foreclosure crisis threatens the stability of old neighborhoods. Foreclosures of two- and three-family homes soared 202 percent, to 353 homes in 2007 from 117 in 2006, the data show. Foreclosures of condominiums, the source of new housing growth in cities, increased 192 percent, to 216 units, from 74 the prior year. Foreclosures on single-family homes rose 177 percent, to 471, from 170 in 2006, according to the data.
Abandoned homes, many of them boarded up, have cast a long shadow over the urban housing market.
"It's tragic when you see it," said Mayor Edward J. Clancy Jr. of Lynn, remarking about the Highlands, one of Lynn's oldest and poorest neighborhoods. "People got into deals that looked too good to be true. . . And then they were left with nothing."
"It's a big, big worry," said Mayor James Fiorentini of Haverhill. "One blighted house can ruin a neighborhood."
The foreclosures have prompted communities to take a preemptive strike against blight. Peabody is enforcing an ordinance that requires property owners to keep up vacant properties. The city may also create a loan pool to assist buyers of foreclosed properties to improve them. "We want to work with them to get the properties revitalized," said Jean Delios, community development director in Peabody.
In Lynn, the city has boarded up eight abandoned houses. The city has put liens on the properties to recover the costs. "We don't have time to be chasing down mortgage companies," said Michael Donovan, the city's inspectional services director. "We can't have nuisance properties in our neighborhoods."
Haverhill plans to form a task force to monitor foreclosed properties, and help people at risk of losing their homes. "We're going to have a watch list," said Fiorentini, who said he got the task force idea after attending a US Conference of Mayors meeting in January. "We're going to make sure the people who are responsible for the properties keep them up."
A new online foreclosure registry, salemdeeds.com, contains information about the owners of foreclosed properties. The registry has also started to fax copies of foreclosure deeds to local officials, such as health inspectors, to alert them to a vacant property.
"We send it as soon as it's recorded," said John L. O'Brien, registrar of deeds for Southern Essex County. "We hope this helps communities get a better handle on this."
Foreclosures, which also tripled during the month of January across Massachusetts, are expected to continue at a high rate, further weakening the housing market, a specialist said.
"From what we've seen, they're going to be as high as they've ever been," said Tim Warren, chief executive of The Warren Group. "Unfortunately, because real estate prices have dropped, these distressed properties just aren't worth what they were."
The fallout has made it nearly impossible for struggling homeowners to take advantage of so-called "rescue loans." The government-backed loans aim to replace adjustable rate mortgages with fixed-rate loans. But homeowners often are too far behind on payments, or their property value has dropped too low to qualify.
The Home Saver Program, a $250 million loan pool made available by the state last July, has so far made only six loans, totaling $1.5 million, according to MassHousing, the state's affordable housing bank.
"When the program was being put together, the expectation was that a lot of people would be able to be helped," said Thomas Farmer, a spokesman for MassHousing. "But since then, it's become pretty clear that the [foreclosure] situation is even more dire than first thought."
And that leaves homeowners like Alarcon with little hope.
After renting an apartment in Chelsea for 16 years, Alarcon bought a house for about $330,000 four years ago. She used $35,000, her life savings, as a down payment. She received an adjustable rate mortgage from a local bank, but it was not considered a subprime loan.
The mortgage payment first was $2,000 per month. After two years, the interest rate adjusted, and the payment climbed to $2,300. It then adjusted again, hitting $2,700 last year, she said.
At the same time, business at her restaurant also declined, greatly reducing her salary, she said. She lives with her husband, who makes deliveries for the restaurant, and her sister, who cleans houses. Her 21-year-old son is unemployed, she said.
Together, the four of them do not earn enough to keep up with the payments, Alarcon said.
She sought counseling from Chelsea Restoration Corp., a nonprofit housing advocacy group. They worked with a local bank, which agreed to restructure the adjustable rate mortgage, reducing the monthly payment by about $700.
But with business down at the restaurant, Alarcon still can't afford the reduced payment. She's behind on gas and electricity bills, too. She sees little hope in reversing her misfortune. "I saved for 20 years to buy a house," Alarcon said, speaking in her native Spanish. "Now I have nothing."
Matt Carroll and Katheleen Conti of the Globe staff contributed to this report. Kathy McCabe can be reached at kmccabe@globe.com.
