Massachusetts Foreclosed Home for Sale Down, Experts Still Worried

Before local Massachusetts residents have even begun cheering the decline in the number of foreclosed home for sale recorded in the state, industry experts are bursting their bubble. The reason — the rate of foreclosure petition has increased by almost 6 percent.

A standard foreclosure process usually starts with the lender sending a notice of default but in states like Massachusetts, the first step involves the lender filing for a “petition to foreclose”. The foreclosure situation in the state can thus be predicted based on the number of foreclosure petitions filed. If there is a considerable increase or decrease, the number of repo homes could follow such trend.

Based on a report released by The Warren Group, there were 4,737 foreclosed home for sale from the period starting January to June 2009. Comparing the figure to that of last year’s, there was a considerable 29.4 percent decline.

Industry experts believe that the decline can be attributed to the new state legislation that encouraged mortgage lenders to agree to a loan modification option for the troubled borrowers. With a loan modification, borrowers can choose to lower their monthly mortgage payments or lengthen the loan term. Either way, they will be able to have a fighting chance of keeping their property from foreclosed home for sale listings.

But, according to the same report, there was also a 6 percent increase in foreclosure petitions for the same year. To be exact, lenders petitioned for 13,813 foreclosures up from 13,076 in 2008.

Foreclosure petitions for June also jumped by 800 percent, from 350 last year to 2,835 and 21.7 percent from May 2009. The number of foreclosure petitions for June is actually the highest in the last 13 months.

It is, therefore, not surprising, that local industry experts are worried especially since the recent foreclosure petition figures were taken after the recorded increase in the state’s unemployment rate. Joblessness is currently at its peak since September of 1992.

Based on all these figures, it is possible that the number of foreclosed home for sale in the state will soar once again unless mortgage lenders and troubled borrowers start communicating and finding a common ground so that the foreclosure will not proceed.

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