By Kristen Grieco
Staff writer
February 25, 2008 09:00 am As foreclosure rates across the state skyrocket, those on Cape Ann have slowed. Numbers released last week by The Warren Group sounded an alarm: with 800 foreclosures statewide last month, Massachusetts had hit its highest numbers since August of last year. But the same figures show that Cape Ann homeowners lost 25 homes to foreclosure last year. That's eight more homes than homeowners lost in the area in 2006 — but the numbers also show the bleeding has slowed, at least compared to 2006, when foreclosures doubled from the previous year. The word is much worse in the rest of Essex County. Overall, the county saw a 268 percent increase in foreclosures over last year, with a total of 1,038 homes seized. "If you compare (Cape Ann with) like communities, we're doing OK," said Pat Parady of the Granite Savings Bank in Rockport. "On the whole, I would say, yes, we're holding our own." Parady added that Granite Savings Bank does not have mortgagees facing foreclosure at the moment. Experts were unable to explain the slower growth on Cape Ann. Tim Warren, chief executive of The Warren Group, said the subprime mortgages that are commonly the subject of foreclosures are more prevalent in urban areas. The mortgages had looser qualifying restrictions than traditional loans and often allowed applicants to put little or nothing down, a practice that caused monthly payments to shoot up a few years into the loan. Many homeowners now can't keep up. "Everybody was seeing home prices go up so fast, it was very tempting to participate and join in the real estate market," Warren said. As prices fall from their market highs, Parady said, those who took advantage of those loans are not getting the equity in their home that they once expected, and could be falling behind in payments. But while growth may be stemmed on Cape Ann, at least for now, foreclosures are still on the rise, and experts say there's little sign of them stopping. One way of looking at future foreclosures is examining the petitions to foreclose, Warren said. Before a bank or mortgage company seizes a home from its owners, the institution files a petition in Land Court, usually after 30 days of nonpayment on the loan. Many homeowners resolve the loan or sell the home before foreclosure — meaning that the home never goes to auction. But Warren said that the December numbers for the petitions were still high, indicating a steady pace in foreclosures. "What I find astounding is that 30,000 homes entered into the foreclosure process last year (statewide)," Warren said. "That's 30,000 desperate households that have to do something, 30,000 distressed properties. Only 50,000 homes were sold across the state." Cape Ann is also faring well in foreclosure petitions as compared to the rest of Essex County. ForeclosuresMass Corp., a group that tracks the petitions filed in the Land Court, only had data available through last November. However, they said that, while Gloucester saw about a 26 percent jump in filings between 2006 and 2007 — the highest on Cape Ann — the rest of the county saw a 78 percent increase. The higher numbers are driven by communities like Lynn and Lawrence, which saw huge numbers of foreclosures last year. Warren said experts differ on whether the real estate market has ever seen a crisis of this magnitude, but that some believe foreclosure rates were higher during the last major real estate downturn in the mid-1990s. "In that case, the real estate market turned down for five straight years and then took five years to turn back," Warren said. "I'd certainly hope we aren't in that type of cycle again." ><p>
Kristen Grieco can be reached at kgrieco@gloucestertimes.com
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