With the state unemployment rate at 8.9 percent last month, long lines at job fairs, such as this one in Boston this past spring, persist.(Associated Press/File)
As jobs remain elusive, foreclosures rise again
Data suggest government’s help should target homeowners who are unemployed
With the state unemployment rate at 8.9 percent last month, long lines at job fairs, such as this one in Boston this past spring, persist.(Associated Press/File)
More Massachusetts borrowers lost their homes to foreclosure in October than in the month before, figures released yesterday show, adding to evidence that the sluggish economy is hindering national efforts to help homeowners keep their property.
Foreclosures in the state jumped by nearly 30 percent to 911 in October from 703 in September, according to data released by the Warren Group, a private company that tracks real-estate numbers. At the same time, the number of foreclosures in October fell from a year ago.
Although data were mixed, the steady flow of foreclosures indicates federal efforts to keep distressed borrowers in their homes will not succeed unless the government also comes to the aid of unemployed homeowners, housing specialists said.
The Obama administration this year launched a massive program, called Making Home Affordable, focused on letting borrowers in trouble modify or refinance their loans, but the effort does not target the unemployed.
To address the growing problem, US Representative Barney Frank, chairman of the House Financial Services Committee, is lobbying the US Treasury Department to lend money to jobless mortgage holders through a $2 billion fund created from monies repaid after the Wall Street bailout. In June, Frank filed similar legislation, which is pending.
“I am pushing to have it done administratively,’’ Frank said in an interview with the Globe yesterday. He said he is encouraged by talks with Treasury officials.
Morris A. Davis, an assistant professor in the Department of Real Estate and Urban Land Economics at the University of Wisconsin-Madison School of Business, said the government needs to act quickly before the foreclosure crisis worsens.
Nationally, the unemployment rate hit 10.2 percent last month, while the state jobless rate fell to 8.9 percent from 9.3 in September, which marked the highest level since 1976.
“We know it is going to get much worse,’’ Davis said of foreclosures. “Policy makers need to act now.’’
The Mortgage Bankers Association released data yesterday that showed how more homeowners are falling behind on mortgage payments. The delinquency rate on residential mortgages in Massachusetts was 9.32 percent at the end of the third quarter, up from about 8 percent in the second quarter, according to the association.
More Massachusetts homeowners have also started the foreclosure process this year. Petitions increased 11 percent in October compared with the same month last year, according to the Warren Group. The number of foreclosure petitions through October of this year has jumped 27 percent compared with the same period last year.
“Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases,’’ said Jay Brinkmann, chief economist for the Mortgage Bankers Association.
Even in some of the state’s more expensive communities, such as Brookline, Newton, and Wellesley, the number of homeowners facing foreclosure is on the rise, according to the Warren Group. While the numbers are not high - for example, 78 borrowers in Newton have fallen into foreclosure this year - homeowners struggling to make mortgage payments probably are being affected more by the economy than by problems with a subprime loan, housing specialists say.
Mortgage difficulties are now occurring “much more in the prime mortgages where people had good credit, got good mortgages, and perhaps they lost a job,’’ said Timothy M. Warren Jr., chief executive of the Warren Group. “We are moving to the more expensive communities.’’
© Copyright 2009 Globe Newspaper Company.
