Massachusetts Foreclosure Law Creates Calm Before the Storm
Wednesday, June 25, 2008
by Michael Peron
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A new mandate included in a Massachusetts foreclosure law has prompted the number of foreclosure filings in the state to fall to 392 filings in May from 3,414 filings the month before, according to ForeclosuresMass.com, a provider of Massachusetts foreclosure data.
ForeclosuresMass.com is warning lenders and homeowners in the state to avoid a literal interpretation of the numbers, especially when the organization believes the numbers reflect the impact of a new foreclosure law, rather than a real lull created by successful loss mitigation measures and a solid real estate market.
The foreclosure data provider says Chapter 206 of the new “Act Protecting and Preserving Home Ownership” in Massachusetts is causing a steep decline in foreclosures. The company adds that, “One of the provisions of Chapter 206 includes a 90-day “Right to Cure” after default on mortgage loans for 1 to four family, owner-occupied residential property.”
Sheila Farragher-Gemma, co-founder of ForeclosuresMass.com, warns that the law is creating a short-term boon for homeowners, while the underlying risk remains.
“The new filing requirements have created a situation similar to the eye of a hurricane – it may seem calm now, but the storm will come raging back with even more force in the days ahead,” said Farragher-Gemma. “The fact is that nothing has changed in the Massachusetts real estate market. More homeowners than ever before are defaulting on their loans, and we expect that we will return to historic foreclosure filing levels within weeks.”
Here are more statistics from ForeclosuresMass.com:
Between June 1, 2007 and May 31, 2008, 32,018 foreclosures were initiated statewide, an increase of 35.45 percent over the year before.
Foreclosures were up in 267 of the state's 352 communities in the past twelve months. About 117 Massachusetts communities experienced at least a 50 percent increase.
April 2008 was the single highest month on record with 3,414 filings recorded.
The month of May 2008 brought 392 filings, but because of a mandated extension, May experienced an 81.65 percent drop in foreclosure filings when compared to May of last year. Kerri Panchuk
ForeclosuresMass.com is warning lenders and homeowners in the state to avoid a literal interpretation of the numbers, especially when the organization believes the numbers reflect the impact of a new foreclosure law, rather than a real lull created by successful loss mitigation measures and a solid real estate market.
The foreclosure data provider says Chapter 206 of the new “Act Protecting and Preserving Home Ownership” in Massachusetts is causing a steep decline in foreclosures. The company adds that, “One of the provisions of Chapter 206 includes a 90-day “Right to Cure” after default on mortgage loans for 1 to four family, owner-occupied residential property.”
Sheila Farragher-Gemma, co-founder of ForeclosuresMass.com, warns that the law is creating a short-term boon for homeowners, while the underlying risk remains.
“The new filing requirements have created a situation similar to the eye of a hurricane – it may seem calm now, but the storm will come raging back with even more force in the days ahead,” said Farragher-Gemma. “The fact is that nothing has changed in the Massachusetts real estate market. More homeowners than ever before are defaulting on their loans, and we expect that we will return to historic foreclosure filing levels within weeks.”
Here are more statistics from ForeclosuresMass.com:
Between June 1, 2007 and May 31, 2008, 32,018 foreclosures were initiated statewide, an increase of 35.45 percent over the year before.
Foreclosures were up in 267 of the state's 352 communities in the past twelve months. About 117 Massachusetts communities experienced at least a 50 percent increase.
April 2008 was the single highest month on record with 3,414 filings recorded.
The month of May 2008 brought 392 filings, but because of a mandated extension, May experienced an 81.65 percent drop in foreclosure filings when compared to May of last year. Kerri Panchuk
