Tuesday, July 14, 2015

Late Foreclosure

Related: U.S. Economy Back on Track 

How about that housing market, huh?

"Bump in Mass. foreclosures blamed on new rules" by Tim Logan Globe Staff  June 30, 2015

Boston’s housing market may be red hot, but other parts of the state are wrestling anew with an old problem: foreclosures.

How many of them are fraudulent thefts this time?

The number of foreclosures initiated by lenders in Massachusetts climbed nearly 60 percent in the first five months of 2015 compared with a year earlier, according to data released Tuesday by the Warren Group.The biggest gains came in cities including Springfield, Brockton, and Worcester.

The increases are being driven by lenders pushing through their backlogs of delinquent loans after new rules governing repossessions were ironed out, said banking groups and housing advocates. They reflect a real estate market in which demand is soaring in Boston and many of its suburbs, and flagging in cities and towns that haven’t benefited from the region’s surging life sciences and technology industries.

I've said it many times, all the wealth is going upward.

“When you look farther afield, those communities aren’t necessarily doing as well in terms of recovery,” said Cassidy Murphy, editorial director at the Warren Group, which tracks housing market data....

Or there isn't a recovery at all.

Much of the current wave is a matter of paperwork, not the return of a problem that plagued the state and much of the rest of the country during the recession, housing market watchers say. State laws passed in 2012 prompted many banks to all but halt foreclosures in Massachusettsfor more than a year while regulators crafted rules governing titles and requiring lenders to offer loan modification before launching a repossession.

Now the laws are clear, and banks are playing catch-up, said Tim Davis, an independent housing research and policy consultant.

“There’s more predictability,” he said. “Lenders now know how to cross their ‘t’s’ and dot their ‘i’s’. That’s the reason they’re cleaning up now.”

And this reason — along with home prices that in some places have rebounded above their pre-crash levels — has market-watchers such as Daren Blomquist of RealtyTrac pointing out the current bump in foreclosures pales next to the mortgage mess that sunk the economy in the late 2000s.

I think we know where.

“We don’t believe this is a new crisis,” said Blomquist, whose firm monitors foreclosure activity nationwide. “It’s leftovers from the old crisis.”

A majority of mortgages nationwide that are going through foreclosure today were originated before the crash in 2008. Troubled loans have lingered longer in Massachusetts, where the average foreclosure in the first quarter took more than two years from initial filing to final repossession. Other states with similarly slow processes — which in many cases are designed to protect borrowers — have also seen their foreclosure rates climb in the last year, he said, including Maryland, New Jersey, and New York.

“You can be dealing with properties that have been in the pipeline for three, four, five years and are now finally being foreclosed on,” Blomquist said.

That’s what’s going on here, said Jon Skarin, vice president of the Massachusetts Bankers Association. Banks have sorted out the new laws and broken the foreclosure logjam, in some cases closing out loans where borrowers haven’t made a payment in two years or more. He said he expects the current wave to settle down soon.

“Nobody wants to see foreclosures going up,” he said. “Our hope is that in the next six months you’ll start to see the process get a little more normal and the numbers start to return to a more stable environment.”

This guy is offensive to me, and banks wanting to seize hard assets to balance their books don't mind foreclosing.

That won’t happen on its own, said Grace Ross, coordinator of the Massachusetts Alliance Against Predatory Lending. The after-effects of bad lending practices from the bubble years are still distorting the housing market, she said, especially in outer cities where home prices have not recovered.

“It’s not like there aren’t still problems,” said Ross, who was on Beacon Hill Tuesday to testify on behalf of a slate of bills she hopes will help ease ongoing foreclosure woes and prevent new bad loans. “We’re not seeing a bounce back in the hardest-hit communities. We’re not seeing a bounce back in employment either.”

That so flies in the face of the linked post I led with.