Boston.com News is reporting Foreclosures up 35 percent this year.
Filings in suburban Reading more than tripled and there’s been a 113 percent increase in Lawrence compared with the same period last year, according to Land Court filings tracked by Framingham-based ForeclosuresMass.
“It spans the whole gamut of income levels,” said Jeremy Shapiro, president of ForeclosuresMass.
The number of foreclosures filed through Oct. 31 was 9,459, compared with 7,003 in the same 10-month period last year, the report said. Essex County had the largest increase, at 50 percent.
Adjustable-rate and interest-only loans, which are riskier than traditional fixed-rate loans, are partly to blame. They’ve become popular because they cost less up front, but they require higher payments typically after a year or two.
“A lot of people don’t realize what they’re getting themselves into,” said Jim Wilde, executive director of the Merrimack Valley Housing Partnership, which administers homebuying classes to residents of Lowell, Lawrence and the surrounding towns.
Interest-only loans, in which homeowners don’t pay down the principle right away, are “gimmicks in order to qualify (homebuyers) for the first six months or year,” Wilde said. “When the principle payments kick in, they’re behind the 8-ball.”
Wilde said that on Wednesday alone he talked one couple out of signing a “no documentation” loan that would have cost $2,000 a month. The prospective buyers had an annual household income of just $28,000.
“They would have never been able to make the payments,” he said.
Why is this a case of talking a couple out of a no doc loan?
It would seem to me that if one really knows a couple’s income is $28,000 then point blank they have no business applying for a loan that would have their mortgage at $2,000 a month. It would have been fraud to let them take that loan.
Talk them out of it?
It should have been denied with a warning about fraud.
Is there any doubt about why forclosures are rising?
Take a look at foreclosures in the states three largest cities:
- Worcester – foreclosures up 52 percent
- Boston – foreclosures up 42 percent in Boston
- Springfield – Foreclosures up 20%
This process is going to spread from city to city to city.
At some point I expect to see half finished condos halted mid-construction in Florida.
When investors start walking away from their $10,000 option to buy, developers are going to be left holding the bag, along with unfortunate flippers that closed on these properties.
Mike Shedlock / Mish/