Lenders started and completed more foreclosures in Massachusetts during the third quarter than the previous quarter, but foreclosures have declined almost 30% year-over-year, according to a new report by The Warren Group.
A total of 2,048 foreclosure deeds were recorded from July through September – a 3.9% increase from 1,971 in the second quarter. But foreclosures dropped 29.4% from 2,903 in the third quarter of 2008. There were 702 foreclosures in September – up 6.7% from 658 in August and down 12.1% from 799 in September 2008. Year-to-date foreclosure deeds fell 29.5% to 6,778 from 9,610 the year before.
A number of factors – including servicers' uptake of the Home Affordable Modificatoin Program, bank-level foreclosure moratoria, and a state law that went into effect last year and that delays the initiation of foreclosure proceedings – contributed to the foreclosure decline, observes Timothy M. Warren, CEO of the Warren Group.
Warren also notes that a recent court ruling has caused many lenders to proceed more cautiously before completing foreclosures. Last week, a Massachusetts land court judge reaffirmed an earlier decision that invalidated two foreclosures because the lenders had not properly proven that they owned the properties at the time they advertised the foreclosure auctions.
"This ruling has forced some lenders to hold back on proceedings until proper mortgage assignments have been made," Warren says.
Petitions to foreclose, which mark the first step in the foreclosure process in Massachusetts, have remained fairly steady this year, rising 9% to 7,822 in the third quarter from 7,177 in the second quarter. Third-quarter petitions also shot up 111.2% from 3,703 in the third quarter of last year.
Warren notes that the jump in year-over-year foreclosure petitions is mostly due to the state law that went into effect last May and that led to a temporary lull in the initiation of foreclosure proceedings. The law requires lenders intending to start foreclosure proceedings to give defaulting borrowers 90 days to catch up with missed payments.
"Even though there's been a drop in actual foreclosures, lenders have been starting foreclosure proceedings at about the same pace for most of the year," Warren adds. "September marked the third month so far this year when more than 2,500 petitions to foreclose were filed."
September foreclosure petitions climbed 5.5% to 2,527 from 2,396 in August. Lenders have filed a total of 21,635 petitions to foreclose from January through September – up 28.9% from 16,779 during the same months in 2008.
The Warren Group tracked 1,716 auction announcements in September – a 21.8% increase from 1,409 in August.
SOURCE: The Warren Group