(Foreclosure Monitor is an effort by MHP to help public officials determine how best to use their resources to help homeowners and neighborhoods hard-hit by foreclosure).
By Tim H. Davis
BOSTON, May 2, 2012--- Foreclosure activity increased in Massachusetts during the first quarter of 2012, but the increase was not enough to overcome the overall decline in foreclosure distress from its peak of two years ago.
Foreclosure Monitor's analysis of data from The Warren Group showed that the number of Massachusetts foreclosure petitions in Feb. 2012 was 101 percent higher than Feb. 2011, an increase from 694 to 1,394 petitions. Increased activity in the first quarter was also reported by RealtyTrac. Using a wider definition of foreclosure activity, RealtyTrac reported a 26 percent increase in foreclosure activity in Massachusetts from Q1 2011 to Q1 2012.
Despite the spike, the Feb. 2012 increase reported by The Warren Group remained 34 percent below the Feb. 2010 number of 2,122 petitions. The Monitor's quarterly analysis also showed that the number of housing units in distress declined 8.6 percent in Massachusetts from April 1, 2011 to April 1, 2012, and 4.7 percent from our last report in February.
What this means is that despite the recent uptick in foreclosure activity, lenders are still struggling to ramp up foreclosure proceedings on the backlog of properties in default. While the failure of lenders to complete foreclosures provides homeowners and tenants valuable time to find alternative housing, it can also leave a house in limbo. Timely repairs are not made, and if the homeowner moves out, the property can become a drag on the surrounding neighborhood. Banks are not set up to serve as long-term landlords, so the more quickly a home is returned to the marketplace, the more likely the home, its neighborhood and the overall market can recover.
Two factors may help lenders work through the backlog. First, the Feb. 2012 settlement between five major lenders and the states will bring $318 million in relief to Massachusetts homeowners (both present and those that have already been foreclosed).It would seem that, with a settlement now in place, lenders will ramp up their foreclosure activity and address existing mortgage defaults.
Given that the settlement requires lenders to provide more loan modifications, it is possible that some of these defaults will be resolved and foreclosure averted. Massachusetts Attorney General Martha Coakley is making a portion of the settlement funds available to the new HomeCorps initiative. Some of these funds will be spent to support the legal representation of homeowners, which should result in additional loan modifications and/or delays in the foreclosure process.
Second, as the Massachusetts economy continues to improve, mortgage defaults should also decline. As of March 2011, unemployment in Massachusetts stood at 6.5 percent, lower than the national rate of 8.2 percent. In addition, in its latest report, Lender Processing Services, Inc. found that 9.9 percent of Massachusetts mortgages were non-current (delinquent or in the foreclosure process) as of Feb. 2012, down 8.4 percent from the year before and below the national rate of 11.7 percent.
Communities: Distress Declines in Larger Communities
In this issue of the Foreclosure Monitor, we are pleased to be able to provide the top 30 most distressed communities, instead of the top 20. Even with including 10 additional communities, the patterns remain much the same, as distress is highest in two regions of the state: Southeastern Massachusetts (Bristol and Plymouth Counties) and Central Massachusetts (Worcester County). In addition, outside these regions, Springfield, Lynn and Lawrence continue to suffer from foreclosure distress.
Of the top 30 most distressed communities in Massachusetts,10 have more than 10,000 housing units. Distress declined in all10 of these communities from April 1, 2011 to April 1, 2012.
Of the top 30 communities, 21 had a decline in distress from April 1, 2011 to April 1, 2012. Eight had an increase in distress, and one (Acushnet) had no change in distress. The eight communities with an increase in distress are all relatively small, though Middleborough was the largest of these communities (9,023 housing units), and had an 11.4 percent increase in distress.
In the last report, year-over-year increases in distress in Fitchburg and Springfield were of concern, but in this quarter's report, both communities have seen a decline since the year before (-11.2 percent in Fitchburg and -7.3 percent in Springfield).
Back in Oct. 2010, Foreclosure Monitor reported that for the first time, suburban/rural communities had a higher rate of distress than the urban Gateway cities and Boston (50.6 to 49.4 percent). That gap has widened over the last 18 months to 53.1-46.9 percent as of April1, 2012. In the last issue of this report, Foreclosure Monitor reported that the shift away from the urban areas had not only stabilized, but that there had been a slight reversal in Q4 2011. This has not turned into a new trend. Rather, the slow shift from urban to suburban/rural areas resumed in the last quarter.
Here are some other highlights from our latest community analysis:
Brockton continues to have the highest level of distress, though it declined 17.3 percent from the year before.
The largest declines in distress were in North Brookfield (-31.5 percent), Ashburnham (-27.1 percent), Lawrence (-22.5 percent) and Worcester (-22.5 percent).
Compared to one year ago, where only one Bristol County community was in the top 30 (Taunton), as of April 1, 2012, there were four (Acushnet, Attleboro, New Bedford and Taunton).
Of the top 30 as of April 1, 2011, the greatest declines in distress were Leicester (-46 percent, now ranked 85th), Everett (-43 percent, now ranked 73rd), and Blackstone (-37 percent, now ranked 59th).
Boston ranked 151st of the 292 municipalities ranked in its rate of distress, but had the highest number of distressed units due to its sheer size. As of April 1, 2012, Boston had 2,107 distressed units, a 26.3 percent decline from last year.
For the second quarter, Springfield had the second-highest number of distressed units (1,336) in the state, followed by Worcester (1,271 units) and Brockton (950).
Zip codes: Most distressed show improvement
Only two of the top 30 zip codes had an increase in distress from April 1, 2011 to April 1, 2012: the small Worcester County zip code of 01436 in Templeton (106.2 percent), and the Hampden County zip code of 01521 in Holland (30 percent). The largest decline was in Warren's 01585 (-44.6 percent).
Templeton's 01436 was the most distressed zip code in Massachusetts the last two quarters, but ranked third as of April 1, 2012. Springfield's 01109 took the top spot this quarter, up from fourth one year ago. Brockton's 02302 was the most distressed zip code a year ago, and is currently ranked second.
The distribution of zip codes in distress by county shifted somewhat from Worcester County to Hampden County over the last year. Worcester County has eight zip codes in the top 30 this quarter, compared to 11 the year before. Seven of the zip codes are in Hampden County (six of which are in Springfield), compared to five a year ago. Plymouth County also has four zip codes in the top 30 as of April 1, 2012, the same number as April 1, 2011.
Census Tract: Top 30 most distressed in just eight cities
While the number of housing units in a zip code can range from dozens to more than 20,000, the number of units in a census tract generally ranges from 1,000 to 3,000, providing a smaller area of analysis that shows us where the high levels of distress are in urban neighborhoods.
In the last Foreclosure Monitor, we reported that all of the top 20 census tracts were located in just six cities. With the expansion of our report to include 30 cities, two additional communities are represented (Attleboro and Fitchburg).
For the third quarter in a row, Worcester's tract 7324 has the highest rate of distressed units, though the rate of distress declined 4.5 percent since April 1, 2011. Only one other Worcester tract (7319) also placed in the top 30. Mirroring their positions as two of the most distressed municipalities in the state, nine of the most distressed tracts are in Brockton, and seven are in Springfield. Four of the most distressed census tracts are located in the Boston neighborhoods of Dorchester, Mattapan and Roxbury.
The biggest increase in distress was New Bedford's tract 6511, where distress increased 47.7 percent since a year ago, bringing this tract from 141st to 9th. The biggest decline in distress was in Springfield's 8018 (-31.9 percent).
For more information
The following links are provided for readers to directly access regular sources of foreclosure and real estate trends, some of which are mentioned in the proceeding analysis:
Foreclosure data: The Warren Group most recently released foreclosure data for the month of Feb. 2012. The number of foreclosure deeds filed in Feb. 2012 (736) was 41 percent higher than the 521 filed in Feb. 2011. In addition, 1,394 foreclosure petitions had been filed in Feb. 2012, a 101 percent increase over Feb. 2011. At 694 petitions, Feb. 2011 represented the lowest number of petitions filed in any month since July 2008.
Nationally, foreclosure activity (as reported by RealtyTrac) was down 16 percent from Q1 2011 to Q1 2012. Despite this decline, RealtyTrac officials still expect a wave of foreclosures, as lenders begin to address a back-long of distressed properties.
Real estate sales data: The Warren Group and the Massachusetts Association of Realtors (MAR) recently released their monthly real estate sales figures. The two use somewhat different data sets for analysis. The Warren Group reported a 20 percent increase in the number of single family sales from March 2011 to March 2012, but a 3.3 percent decline in single family sales prices, while the Mass. Association of Realtors reported a 19.1 percent increase in single family sales and a 2.2 percent decline in single family sales prices.
The S&P/Case-Schiller Price Index recently released its Feb. 2012 data. Prices continue to fall nationally as well as for Boston. Of the 20 cities measured, five cities (Denver, Detroit, Miami, Minneapolis and Phoenix) had price increases from Feb. 2011 to Feb. 2012. Boston's annual price decline of 2.4 percent was better than 12 of the 20 cities. Even so, Boston's single family prices are only 0.1 percent higher than the trough of the market in April 2009.