Massachusetts Foreclosure Petitions, Deeds Decrease by Double Digits

With drastic declines in foreclosure numbers, it appears the foreclosure crisis is over for at least one state: Massachusetts.

According to the Mortgage Bankers Association, Massachusetts ranks 48th in foreclosures started in the first quarter of 2013.

Real estate data provider The Warren Group revealed that lenders filed 284 petitions to foreclose in March, which is an 82% decrease from a year ago and down 66% month-over-month. For the first three months of 2013, a total of 2,080 petitions to foreclose have been filed in Massachusetts, a 52% decline from the same time period last year. 

Meanwhile, during the peak of the housing crisis in 2009, there were 2,899 petitions filed in a single month, approximately ten times more than what occurred this March. Timothy M. Warren Jr., CEO of Boston-based The Warren Group, said at the end of March, only 2.6% of mortgage loans in Massachusetts were in any stage of the foreclosure process.

Additionally, foreclosure deeds posted a sharp decrease on a yearly basis in March down 74% to 227. Also, the number of auction announcements fell 67% year-over-year as there were only 398 during March 2013.  

“Overall, we’re seeing foreclosures drop all over the country, but Massachusetts is exceptional in its reduction. The decline is dramatic and seems to be accelerating” Warren stated.

One of the main reasons why there has been a tremendous drop in foreclosure activity for the Bay State is legislation that went into effect a year ago compelling lenders to evaluate borrowers for modification before launching a foreclosure action. This new law has made many servicers leery of starting a foreclosure action due to the costs it takes to complete the default foreclosure process and the losses they will incur by eventually owning a vacant property.

The other factor slowing the number of foreclosures in Massachusetts is the booming real estate market, where median prices climbed 11% in the first quarter of 2013. With homes worth more than a year ago and homebuyers complaining that there are not enough homes available for sale, it is logical that foreclosure is the last option to be considered for delinquent mortgages, Warren said.

However, he noted that from the peak of the market when median prices in the Bay State fell by nearly 20% over a seven year period, there is still work to be done to regain home values.

“At best, we have gained half of that decline, which means some homeowners are still underwater on their mortgages and means foreclosures are still likely in those cases,” Warren added.