The Northeast Could Become A Foreclosure Danger Zone

So far this year, 4,742 more Massachusetts homeowners have teetered on the edge of losing their homes than at the same time last year.

Announcements of foreclosure auctions jumped 170% during the first six months of 2007, compared to the first six months of 2006, according to The Warren Group.

This year, 7,539 homeowners have faced one of the final steps in the foreclosure process, the announcement of an impending auction. By the end of June 2006, only 2,797 homeowners in the Bay State had faced imminent foreclosure.

Auction announcements during the month of June also rose when compared to June 2006 numbers. There were 719 announcements in June 2006 and 1,322 in June 2007, an increase of 83.9%. Announcements in June fell 11.1% compared to May 2007, when there were 1,487 announcements.

Petitions to foreclose are the first step in the foreclosure process, and do not always end in actual foreclosure. Some homeowners eventually sell their homes or refinance. Announcements are placed in newspapers to advertise a scheduled auction, but are not a final count of actual foreclosure auctions. Some homeowners sell their homes before the auction happens.

"Petitions to foreclose and auction announcements are still rising at staggering rates," said Timothy Warren Jr., CEO of The Warren Group. "Nearly every county in the state is being hit hard by this trend, and individual homeowners across Massachusetts are finding it difficult to keep up with mortgage payments as interest rates reset."

Massachusetts is still relatively low in foreclosures compared to other areas of the country.

In July, five states accounted for 61% of the total number of foreclosure listing filings. California had the highest number of foreclosure home listings for the month, with 29,931 homes entering some phase of the foreclosure process. Florida was second with 27,395 foreclosure home filings and a 14% increase in activity since June. Texas took third place with 8,975 filings, or one foreclosure home listing for every 898 households. Illinois and Nevada rounded off the top five states with 7,040 and 6,649 foreclosure listing filings, respectively.

Month-to-month foreclosure home listing activity declined in several states, with a few sharp increases in July. Rhode Island demonstrated the largest increase in foreclosure filings with a 37% increase over the previous month. Foreclosure activity also increased in Kansas (36%), the District of Columbia (32%) and Missouri (28%).

The foreclosure activity rate noted only slight changes from the previous month's 86.5% to 85.3% in July. A large percentage of the foreclosure activity continued to occur in the single-family residence market. The condominium and town home markets totaled 7.4% of the foreclosure home filings for July, up from 7.2% in June. The remaining estimated 7.3% of foreclosure activity was comprised of commercial, land, mobile home and multifamily listings.

Five states posted higher-than-average (7.4%) rates of condo/town home foreclosures: Hawaii at 29.2%; Florida at 13.9% and California at 10.4%; Massachusetts 10.2% and Alaska 7.8%.

Arkansas reported that 8.1% of its foreclosure activity was in the land market segment, over three times the national average of 2.6%. Florida (6.7%) and New Jersey (3.7%) rounded off the top three filings categorized as "land type" real estate properties.

In July, multi-unit Foreclosure remained high and accounted for 2% of all foreclosure activity. At a national level, it was Rhode Island that noted a 28.8% increase in multifamily home foreclosures, followed by Massachusetts (20.3%) and Connecticut (16%).

According to attorney Ronald Deutsch, some argue that sellers have run out of buyers, because affordability has reached the breaking point. Only 15% of buyers can now afford to purchase the median priced home in many markets. Washington, D.C., appreciation has well exceeded the national average, with homes increasing almost 25% in 2006 and over 107% during the past five years, as it continues to have strong employment.

Unemployment is still low in the Northeast. "Jobs fuel demand for housing and the area was one among a handful of the largest metro areas to add jobs during 2004. Washington, D.C., has diversified its economy, with high-tech industries, although it still draws its greatest strength and stability form the federal government, which employs 29.2% of the population. Moreover, with the focus on homeland security, growth has and is likely to remain robust."

Responding to the market slowdown companies are taking stronger steps to dispose of homes.

Coldwell Banker Residential Brokerage and Tranzon Fox have established a new "ballroom auction" service exclusively for their clients. On Oct. 25, the companies will hold the Fall 2007 Ballroom Auction Event.

"We expect to have between 20 and 30 properties up for auction," said Stephen Karbelk, regional president of Tranzon Fox, Fairfax, Va.

"This auction event, customized for Coldwell Banker's clients, is the perfect avenue for their clients that have time pressures requiring them to sell quickly."

Both companies are leveraging their expansive marketing resources.

"This auction opportunity is just another example of that creativity," said Paul Valentino, president of the Greater Washington Region of Coldwell Banker in Reston, Va. The auction will be held at the Fairview Park Marriott in Falls Church, Va. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com/