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Foreclosure Monitor Third Quarter 2008

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Foreclosure Monitor Third Quarter 2008 Massachusetts Foreclosure Monitor Third Quarter 2008 m.l.S.Z.A•fieLWIAftri.WiTsW,WRM"Air&VMStinT"SMI,,,... fErnitIME..e738..4. A quarterly report for public officials and community leaders working to address the foreclosure crisis in Massachusetts MESAMMIAMMeSt7 Market Overview Massachusetts Housing Inventory Being Absorbed; Modest Price Decline Continues Despite gloomy descriptions of the housing market, home prices are increasing in many states. The Federal Housing Finance Agency reported that prices increased in 30 states from Q2 2007 to Q2 2008, with the largest increase in Oklahoma (4.9 percent). Massachusetts came in 43rd, with a decrease of 2.9 percent. As expected, Florida (-12 percent), Nevada (-14 percent) and California (-16 percent) had the largest price decreases. A recent Business Week analysis found that in Q2 2008, 24 percent of sales in Massachusetts were of distressed properties, up from 8 percent the year before. Distressed sales were a higher percentage of sales in seven states, with California topping the list (41 percent ). The Massachusetts Association of Realtors (MAR) reported that September sales prices were down 13.2 percent from a year ago for single-family homes, and down 7.3 percent for condominiums. In more promising news, MAR also reported 10.2 months inventory of homes on the market in September, down from 12.0 months in September 2007, and well below the recent high of 16.6 months in February. MAR considers inventories of 7.5 months to 8.5 months to be a balanced market. Foreclosures in Massachusetts Increased 72 percent from 2007 to 2008 The Warren Group recently announced that more than 9,609 foreclosure deeds had been filed in Mas- sachusetts in the first three quarters of 2008, up from 5,593 the year before, a 72 percent increase. A foreclosure deed is the Loans with Forelcosure Initiation in the Quarter, final step in the foreclosure process. High quality comparable United States, New England and Massachusetts, through Q2-2008 data on foreclosure deeds from across the country is not avail- 1.4% able. The Federal Reserve Bank of Boston recently reported 1 2% that while the percentage of Massachusetts loans in foreclo- 1.0% sure mirrored the nation in 2007, in Q2 2008 the rate fell in Mas- 0.8% 0.6% sachusetts as a new 90 day right to cure took affect, delaying OA.% foreclosure proceedings. Mortgage Bankers Association/Haver o 2% s pc.h us e,..1s Analytics 60 day + delinquency data paints a gloomier picture, 0.0% C, LC, with 17 percent of Massachusetts sub-prime adjustable loans in g c,9 § 0 0 000a i7 00 0 delinquency in Q2, compared to 12 percent for the nation as a 0 0 Source: Federal P.asena Bank of Boston and whole. Ore Mortgage Banker,: ,r.nc.anonl-isvor Analytics Massachusetts Has Average Proportion of Subprime Loans; Among the Highest Subprime Default Rates Good data on the size and condition of out.standing sub-prime loans (the group of loan products most at risk in the current economy) has become available through a relationship between the Federal Reserve Bank of New York and First American LoanPerformance. This data covers approximately 47 percent of sub-prime lending, and provides insights into the size of the portfolio that may go into foreclosure. As of Published by the Massachusetts Housing Partnership www.mhp.net Compil ,F-f Fnci edited by Tim D,:r Massachusetts Foreclosure Monitor: Third Quarter 2008 August 2008, there were 19.5 outstanding sub-prime loans per 1,000 housing units, placing Massachu- setts 25th among the states. The market share of subprime loans was twice as high in the hardest-hit states of California, Florida and Nevada than it was in Massachusetts. Although the state ranks in the middle of the pack, the news on the status of these loans is distressing as only 51 percent of Massa- chusetts owner-occupants with subprime loans are current on their payments. California, Florida and Michigan are the only states with higher subprime delinquency rates than Massachusetts. Massachu- setts ranks 19th in the percent of subprime loans in the foreclosure process and 8th in the percent of subprime loans that have become bank-owned foreclosed properties. 44 Percent of the Units Affected by Foreclosure in 2008* Are in 2— and 3-Family Homes By and large, data on foreclosures has focused on properties. In Massachusetts, where there are a large number of two— and three-family properties, an analysis of the number of units (both homeowner and renter) is necessary to get a clear picture of the affect of foreclosures on communities. Using War- ren Group data, Table 1 shows Massachusetts foreclosure petitions** by property type. From this data, the total number of units can be determined. Overall, the foreclosure petition rate has increased from 9.1 units per 1,000 housing units in 2006 to 13.5 in 2007 (up 48 percent), and then declined to 12.4 in 2008 (down 8 percent). Some of this decline is attributable to a new 90-day right to cure period meant to give delinquent borrowers a better chance at a resolution before foreclosure proceedings begin. Tak- ing affect May 1, 2008, the number of petitions dropped 79 percent from May/June 2007 to May/June - 2008. More time is needed to assess whether there has been a long-term change in the foreclosure pe- tition rate. In 2006, single-family homes represented 67 percent of the properties in foreclosure, but only 51 percent of the units. By 2008, single-family homes were 60 percent of the properties and 45 percent of the units. After a 90 percent increase in the number of foreclosure petitions, condominiums increased from 10 percent of the properties and 8 percent of the units in 2006 to 15 percent of the properties and 10 percent of the units in 2007. Condominiums were 15 percent of the properties and 11 percent of the units in 2008. Two— and three-family homes increased from 23 percent of the properties and 41 percent of the units in 2006 to 25 percent of the properties and 44 percent of the units in 2008. Table 'I: Massachusetts Foreclosure Petition** Activity, by Prooertv Tvoe Single-Family Homes 11,856 16,062 14,178 Condominiums 1,819 3,460 3,458 Two-Family Homes 2,554 3,958 3,736 Three-Family Homes 1,441 2,202 2,092 Total Properties 17.670 25,682 23,464 .-,%;: Total tin:::: 4.0, 34,044 31,384 Units Affected per 1,000 Hcus- ing Units 9.1 13.5 i Source: MHP analysis of VVarren Group data. references to 2008 in this section refer to the first half of 2008 only. **A foreclosure petition is filej by a lender to initiate the foreclosure process. .fixu, E..ntoixteVala-Jr:r.anWKR4et.aaaXaararme-sn..a2e.i.mf_.t.nrinrEI..r.tr.a.II,IENIIswzreeeaz....01Iaa+..k....ltirnER.eel.snqtr..vz..txeeEtgnr.sifn....[reaa..ao.BaVk•ga.A.'aheedt=.e-xVr..Vd.ya.f.al.w.ty,nreY Massachusetts Foreclosure Monitor: Third Quarter 2008 Communities and Neighborhoods with Concentrated Foreclosures Table 2 provides a snapshot of foreclosure petitions during 2006, 2007 and the first half of 2008. In 2006, Brockton topped the list, with 30.7 units affected per 1,000 units, 3.4 times the statewide rate. Nine of the top 20 town/cities were in Worcester County (Athol, Fitchburg, Warren, Winchendon, Leicester, Worcester, Ashburnham, Barre and Lancaster), with another six in Southeastern Massachu- setts (Brockton, Mashpee, Holbrook, New Bedford, Halifax and Wareham). From 2006 to 2007, statewide foreclosure activity increased 48 percent, but it increased 91 percent in Lawrence, bringing this city to the top of the list. Note that by 2007 five cities in Massachusetts had higher foreclosure rates than the previous statewide peak observed in Brockton the year before. Again, Worcester County and Southeastern Massachusetts communities are well represented. Revere made its debut at seventh on the list, with foreclosure activity increasing 115 percent. From 2007 to the first half of 2008, foreclosure activity decreased 8 percent. Outcomes for individual towns and cities is mixed. Lawrence remained at the top of the list, with a 3 percent decrease in activ- ity. Foreclosure activity also fell in cities such as Brockton (-23 percent), Fitchburg (-17 percent), Spring- field (-20 percent) and Revere (-14 percent). Foreclosure activity increased in Lynn (12 percent), Everett (23 percent), Chelsea (15 percent) and Randolph (9 percent). Table 2. Foreclosure Petition Activit , To • 20 Munici • alities Housin • Units > 1,000 Brockton 30.7 Lawrence 50.4 Lawrence 49.1 2 Lawrence 26.4 Brockton 44.2 Lynn 37.6 3 Springfield 21.7 Fitchburg 33.9 Everett 34.5 4 Athol 21.6 Lynn 33.6 Brockton 34.2 5 Fitchburg 21.5 Springfield 31.8 Ashby 34.0 6 Warren 20.5 Chelsea 29.6 Chelsea 33.9 7 Winchendon 19.6 Revere 29.4 North Brookfield 32.8 8 Lynn 19.2 Winchendon 28.3 Fitchburg 28.1 9 Leicester 18.2 Everett 28.0 Randolph 25.7 10 Mashpee 17.9 Athol 27.6 Springfield 25.4 11 Worcester 16.8 Mashpee 26.7 Revere 25.3 12 Lowell 16.7 Worcester 25.2 Marlborough 24.2 13 Holbrook 15.9 Randolph 23.6 Southbridge 23.5 14 Ashburnham 15.5 Hardwick 22.8 Worcester 22.8 15 Orange 15.5 Carver 22,6 Athol 21.8 16 New Bedford 15.3 Whitman 22.2 Douglas 20.7 17 Barre 15.1 21.9 Carver 20.7 18 Halifax 15.0 21.3 Lowell 19.9 19 14 .
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