Massachusetts Foreclosed Homes

Short Sale Tutorial [Video]

The following video contains a basic tutorial on short sales in Massachusetts. It is presented by real estate broker and lawyer Dave Kres, who is the co-owner of Buyers Brokers Only, LLC. Many short sales are in pre-foreclosure status, and completing a short-sale transaction typically takes from two to six months. Buying a short sale requires a great deal of patience.

Mortgage Bailout Plan To Include Short Sales

The U.S. Treasury is set to announce a plan to expand mortgage relief efforts to include short sales by providing a closing cost incentive to homeowners and lenders, the Realty Times reported October 22, 2009.

Now that sounds like a complete waste of taxpayer money.

A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance.

It's a strategy to avoid foreclosure, but banks have been more likely to let a home go into foreclosure, rather than short sell it, even if it means holding the property during moratoriums set by some jurisdictions, such as Massachusetts.

Why you ask? It's because short sale offers often come in well below the last appraisal or any reasonable amount, real estate agents don't want the extra work and time involved and buyers fear a four-to-five month transaction period that could end in the bank refusing to accept the short sale.

My office has had some success closing short sales, but deals that fall apart usually end with unhappy clients, and the result simply isn't our fault. Sometimes it is easier to just avoid the problem altogether.

To help move more distressed properties through to closing, the Treasury, under the Making Home Affordable's Home Affordable Modification Program, is expected to announce a $1,500 closing cost incentive for those who agree to short sales or deed-in-lieu deals, which is when the deed is transferred to the lender, avoiding the more costly foreclosure proceeding.

The U.S. Treasury will also pay the lender $1,000 for accepting a short sale or deed-in-lieu deal. Haven't the taxpayers done enough for banks?

A better approach would be a law that requires lenders to accept or reject all short sale offers within 30 days. In addition, if the property sells after foreclosure for less than any rejected short sale offer, a lender should be barred from pursuing the borrower for any short fall between the sale price and the balance of the mortgage.

Earlier this year when the plan was first considered, there was also a provision to pay second lien holders up to $1,000 to waive their claim in such transactions.

Massachusetts Foreclosures Decline Year-to-date

Year-to-date foreclosure deeds fell 29.5 percent to 6,778 from 9,610 the prior year, The Warren Group, a publisher of real estate data, reported October 20, 2009.

Lenders started and completed more foreclosures in Massachusetts during the third quarter than the previous quarter, but foreclosures have declined almost 30 percent compared to Q3 2008.

A total of 2,048 foreclosure deeds were recorded from July through September, a 3.9 percent increase from the 1,971 in the second quarter. But foreclosures dropped 29.4 percent from 2,903 in the third quarter of 2008. There were 702 foreclosures in September up 6.7 percent from 658 in August and down 12.1 percent from 799 in September 2008.

A recent court ruling has caused many lenders to proceed more cautiously before completing foreclosures. Last week, a Massachusetts Land Court judge reaffirmed an earlier decision that invalidated two foreclosures because the lenders had not properly demonstrated that they owned the properties at the time they advertised the foreclosure auctions. The decision has held up hundreds foreclosure sales.

Petitions to foreclose, which mark the first step in the foreclosure process in Massachusetts, have remained fairly steady this year. September foreclosure petitions climbed 5.5 percent to 2,527 from 2,396 in August and were also 11.9 percent higher than the 2,258 petitions filed in September 2008. Lenders have filed a total of 21,635 petitions to foreclose from January through September, a 28.9 percent increase from 16,779 during the same months in 2008.

The Warren Group tracked 1,716 auction announcements in September, a 21.8 percent increase from 1,409 in August and 15.6 percent higher than the 1,484 auction announcements last September. Year-to-date auction announcements slipped 18.1 percent to 12,519 from 15,282 a year earlier.

Find Massachusetts foreclosed property for sale

Fewer Massachusetts Foreclosures In August

Fewer Massachusetts properties were foreclosed on in August 2009 compared to July 2009 and August 2008, The Warren Group, a publisher of real estate data, reported September 22, 2009.

Despite the drop in foreclosures, petitions to foreclose, the initial stage of the foreclosure process, increased 154 percent to 2,396 in August from 943 during the same month last year but were 17.4 percent lower than the 2,899 petitions filed in July 2009.

There were 658 foreclosure deeds recorded in August, down 34.5 percent from 1,005 in August 2008 and 4.4 percent lower than the 688 deeds recorded in July. Foreclosure deeds are the final step in the process and represent completed foreclosures. A total of 6,076 foreclosure deeds were recorded in the first eight months of 2009, a 31 percent drop from 8,811 in the first eight months of 2008.

The large increase in year-over-year foreclosure petitions is mostly due to a state law that went into effect last May that led to a temporary slowdown in the initiation of foreclosure proceedings. The law requires lenders intending to start foreclosure proceedings to give defaulting borrowers 90 days to catch up with missed payments.

So far this year, lenders have filed 19,108 petitions to foreclose, a 31.6 percent increase from 14,521 recorded during the same period last year.

The number of auction announcements tracked by The Warren Group has fallen this year. Auction announcements dropped 22.1 percent to 1,370 in August from 1,759 in August 2008. So far this year, The Warren Group has tracked 10,764 auction notices, down 22 percent from 13,798 during the same period last year.

Received Listings For MA Bank-owned And Short Sale Properties For Free. 

U.S. Regulators Fight Mortgage Scams

Federal regulators, looking to take away a common tool used in mortgage frauds, are considering a nationwide ban on companies' charging upfront fees for helping homeowners modify loans to avoid foreclosures, the Los Angeles Times reported September 18, 2009.

The move comes as federal and state officials plan to expand a crackdown on mortgage-related scams and other schemes that prey on debt-ridden consumers trying to stay financially afloat due to a poor economy, unemployment, falling home prices and exotic mortgages.

While foreclosures remain near record levels, the only way many consumers can stay in their homes is by reducing their mortgage payments. As often happens during economic downturns, scam artists have tried to cash in on other people's misfortune, this time by asking for large upfront payments for help seeking mortgage modifications.

I heard a radio ad just a few days ago by a "loan modification company" that suggested homeowners didn't need help from the government or lawyers, but should contact them directly to get help with a loan modification.

Number of U.S. Foreclosures Remain Near Record

U.S. mortgage foreclosure filings in August hovered near July's record high despite efforts to keep borrowers in their homes, The New York Times reported September 10, 2009.

Predictions are for foreclosure filings to continue to rise for another year.

Filings, including notices of default, auction and bank repossession, dipped 1 percent last month from July's all-time high and were up 18 percent in August from August 2008

The Times obtained its data from foreclosure firm RealtyTrac. One in every 357 U.S. households with loans got a foreclosure filing in August.

Six states had 62 percent of total foreclosure actions in August. Nevada, Florida and California had the highest state foreclosure rates, respectively. Rounding out the states with the highest rates of foreclosure activity were Michigan, Idaho, Utah, Colorado, Georgia and Illinois. A new Michigan law requiring lenders to file a separate public default notice before slating a foreclosure auction pushed the state to the fifth highest rate from 19th place in the prior month.

Job Losses Fueling Continued Foreclosure Activity

As a result of more Americans losing their jobs, more than 13 percent of U.S. homeowners with a mortgage are either behind on their payments or in foreclosure, the StarTribune.com reported August 20, 2009.

The data come from the Mortgage Bankers Association.

The record-high numbers in the report are being fueled by borrowers with traditional, fixed-rate mortgages, as opposed to the exotic subprime loans with adjustable rates that started the mortgage crisis. As of June, more than 4 percent of all U.S. borrowers were in foreclosure and about 9 percent had missed at least one mortgage payment.

"One in three new foreclosures between April and June was from a prime, fixed-rate loan, up from one in five a year earlier. Last year, subprime adjustable-rate loans caused the largest share of foreclosures."

The nation's foreclosures are concentrated in California, Nevada, Arizona and Florida, which accounted for 44 percent of new foreclosures. At nearly 12 percent of all loans in foreclosure, Florida leads the U.S., followed by Nevada at 9 percent.

"President Barack Obama has pledged to fight the problem, but [his] foreclosure prevention program, known as 'Making Home Affordable,' is off to a disappointing start. As of July, only about one in 10 of eligible borrowers had signed up."

Report: Mass., U.S. Foreclosures Up In July

Despite government efforts to rescue distressed homeowners, the number of Massachusetts homes in foreclosure soared by 43 percent in July compared to the same month last year, the Boston Herald reported August 13, 2009.

The data come from RealtyTrac, a California-based publisher of foreclosure statistics.

RealtyTrac reported that 5,114 homes in Massachusetts received default notices, scheduled auctions or were repossessed by a bank in July.

Nationally, 360,149 U.S. properties were in the foreclosure process last month, an increase of 32 percent from July 2008. The report also shows that one in every 355 U.S. homes received a foreclosure filing in July.

The top state foreclosure activity totals in July were reported by California ( 108,104); Florida (56,486); Arizona (19,694); and Nevada (19,535). Together these four states accounted for nearly 57 percent of the nation’s total foreclosure activity.

Boston Suburbs Not Immune From Foreclosure

A Boston Business Journal report on NECN August 10, 2009 reveals that tony suburbs around Greater Boston cannot escape the foreclosure crisis.

The data comes from The Warren Group.

MA Foreclosures Decline; Foreclosure Petitions Rise

Foreclosures in Massachusetts fell 29 percent during the first half of 2009 compared to a year earlier, The Warren Group, publisher of Banker & Tradesman, reported July 22, 2009; however, petitions to foreclose, the first step in the foreclosure process, rose 5.6 percent during the first six months of 2009 compared to the same period last year.

There were 4,737 foreclosure deeds from January through June, a 29.4 percent drop from 6,707 during the same months in 2008. In June, foreclosure deeds plunged 45.1 percent to 621 from 1,131 in June 2008, but climbed 6.7 percent from 582 in May. Foreclosure deeds are the final step in the foreclosure process.

While foreclosure deeds have declined year-over-year, the number of petitions to foreclose has increased. Lenders filed 13,813 petitions to foreclose during the first six months of 2009, up 5.6 percent from 13,076 last year. June’s foreclosure petitions jumped to 2,835, more than eight times higher than the 350 petitions in June 2008 and 21.7 percent higher than the 2,329 filings in May. The number of petitions to foreclose in June was the highest it’s been in the previous 13 months.

The Warren Group tracked 7,322 auction notices in the first half of the year, nearly 31 percent fewer than the 10,580 auction notices during the same period in 2008. Auction notices in June dropped 10.2 percent to 1,494 from 1,664 last June. But the number of auction notices increased 8.4 percent from May’s 1,378 auction notices.

I suspect we'll see the numbers fluctuate over the next six to 12 months as lenders continue to figure out how to proceed with the Obama Administration's loan modification plan, which has largely been unsuccessful.

Lenders Fail To Modify, So Foreclosures Continue

President Obama's $75 billion plan to reduce the number of foreclosures sweeping the nation has been plagued with backlogs and delays, USA Today Reported June 19, 2009.

Many struggling homeowners have complained about phone calls not returned and inaccurate information from lenders, and others have said they were denied help for reasons that weren't clear.

The Obama plan's goal was to prevent up to 4 million foreclosures by having banks modify loans into more affordable monthly payments; however, since its debut, the plan has led to offers of more than 190,000 mortgage modifications with lower monthly payments, according to Treasury Department numbers. During that same period, lenders either have started or advanced foreclosure proceedings against more than 1 million homes.

"Homeowners who apply for mortgage modifications are finding that banks typically are taking 45 to 60 days to respond to inquiries, according to a report this month by NeighborWorks America, a provider of foreclosure-prevention counseling.

"Some homeowners who applied for mortgage modifications five months ago still have no answer on whether they will be able to arrange smaller monthly payments, leaving them uncertain whether they'll keep their homes or lose them shortly."

Some lenders blame the Obama administration for not outlining the details of the plan until March. These lenders now claim they are beefing up staffing to process modification requests.

"Bank of America reports that it modified about 232,000 mortgages last year. During the first four months of this year, it has completed about 157,000 modifications — all before the Obama housing rescue plan went into effect."

Read The USA Today Article

Find Foreclosed Property In Massachusetts

MA Foreclosure Deeds Down, Starts Rise

The number of foreclosure deeds recorded in Massachusetts declined by double-digit percentages in May compared to the prior year and prior month, The Warren Group, a publisher of real estate data, reported June 18, 2009; however, the number of foreclosure proceedings started by banks and other types of lenders dramatically increased during the same period.

There were 582 foreclosure deeds recorded in May 2009, a 58.6 percent drop from 1,405 in May 2008 and 24.3 percent below the 769 in April 2009. Year-to-date foreclosure deeds fell 26.3 percent to 4,110 from 5,576.

“The number of foreclosure deeds recorded in May was the lowest since April 2007. It is encouraging that foreclosures have declined for two months straight. I think lenders have realized how costly foreclosures can be and are taking steps to avoid foreclosure whenever possible,” Timothy M. Warren Jr., CEO of The Warren Group, said.

“But I remain concerned because unemployment has crept up, and many people who’ve lost their jobs will have trouble keeping up with mortgage payments. In addition, it also looks like the pace of initiated foreclosures has remained fairly steady over the last four months. Lenders have started over 2,000 foreclosures a month since February,” Warren said.

A total of 2,329 foreclosure petitions were filed in May, almost six times the 390 foreclosure petitions filed in May 2008. Foreclosure petitions mark the start of the foreclosure process in Massachusetts. In addition, the number of foreclosure petitions climbed 15.7 percent from 2,013 in April 2009. There were 10,978 foreclosure petitions filed from January through May 2009, 13.7 percent lower than 12,726 last year.

“The sharp increase in May foreclosure petitions year-over-year is due to the so-called 90-day right-to-cure law that went into effect last May. The state law, which requires lenders intending to foreclose to give delinquent borrowers in Massachusetts 90 days to catch up on missed mortgage payments, artificially depressed foreclosure petitions in May 2008,” Warren said.

Auction announcements fell 30.7 percent to 1,377 in May 2009 from 1,987 in May 2008, but climbed 26.8 percent from 1,086 in April 2009.  Year-to-date auction announcements dropped 34.7 percent to 5,825 from 8,916.

Find Massachusetts Bank-owned Properties - Free Listings

Banks May Have A Lot More Inventory To Sell

Are U.S. banks sitting on a lot of real estate inventory?

The Christian Science Monitor reported May 22, 2009 that only about 30 percent of the available bank-owned inventory is on the market in the United States.

The fear of real estate professionals is that this "shadow" inventory will further delay a housing recovery. For investors looking for bargains, the talk of excess inventory is music to their ears.

Real estate professionals believe that banks are holding on to about 500,000 properties that will eventually hit the market.

Of course, the vast amount of this inventory is likely in places such as Phoenix.

Read The Christian Science Monitor Article

Court Ruling Halts Foreclosure Sales

A Springfield, MA Land Court judge's ruling that two banks improperly seized two properties in foreclosure has halted the sale of many bank-owned properties across the state, the Boston Herald reported June 9, 2009.

"Experts say Land Court Judge Richard Long’s recent decision to void two Springfield-area foreclosures over procedural flaws has gummed up resale of foreclosed homes across the state."

One local listing agent that sells mainly bank-owned properties told the Herald that, "It’s just stopped everything," and 12 of her sales have been halted since the ruling.

Due to the judge's decision, title insurance companies are not willing to write lender's or owner's title insurance policies. Without the availability of a lender's policy, lenders are not willing to provide financing on such deals.

"The judge found that the banks held foreclosure auctions even though both lacked documents at the time proving that they really owned the homeowners’ mortgages. That 'clouded' each property’s title, discouraging any third party from bidding on the homes, Long ruled."

I have a similar situation regarding a sale of a single-family home in Tewksbury, MA. My buyer agreed to purchase the property from an investor who bought the property from a bank. For the same reasons as in the Springfield court case, the property has a defective title. We are waiting for the outcome of the case.

"Experts say paperwork flaws are common in foreclosures these days, as mortgages often changed hands over and over again during the 1998-2005 housing boom. Any missing paperwork can call into question whether a bank really owned a loan it foreclosed upon."

Read The Boston Herald Article

Is Debt Reduction The Answer To Foreclosure Mess?

Jim Randel, founder of The Skinny On, wrote an article June 6, 2009 for The Huffington Post suggesting debt reduction is needed to finally solve the nation's foreclosure crisis.

Randel wrote that other measures taken by the Obama Administration have not worked.

"The missing piece is debt relief ... not a reduction in interest rates, not an extension of the loan amortization period, not a temporary abatement in mortgage payments. We need to confront the problem head on and stop nibbling at the edges - we need to discuss principal reduction."

Randel goes on to write that too many homeowners are "under water" on their mortgage, i.e., they owe more than their home is worth.

Randel writes, "Why work your butt off to keep paying on a mortgage, even if your payments are reduced to where you can afford them, when all you are doing is treading water?" How about because it is the right thing to do?

"Today, about 1 in 4 houses with a mortgage are underwater and many more are close. Since about 2/3 of all homeowners have a mortgage, this means that almost 20% of our housing stock has more debt on it than value. That's 13 or 14 million homes. These residents are now quasi-tenants, paying 'rent' to a lender so they can stay in their home with little chance of upside. Obviously that was not the thinking going in when these homes were purchased. Many of these homeowners put in equity and hard work with the hope of cashing in someday. That dream is now gone."

For those responsible homeowners and taxpayers bailing out the nation's banks and every other deadbeat the American Dream is slipping away.

Read The Huffington Post Article