NEWBURYPORT — Data released last week showed the foreclosure crisis isn't slowing down, and this area is not immune.
In Massachusetts, foreclosures rose 128 percent in January, the largest increase since August, and statistics for 2007 show that cities and towns in Greater Newburyport were not immune. In the region, there were 83 foreclosures last year, including 11 in Newburyport and 28 in Amesbury. In those two towns, five more homeowners lost their homes in January.
"Its not a lot in comparison to other cities," said real estate agent for Stone Ridge Properties Lela Lischke-Wright. "I think its a perfect example of the fact no community has been unscathed by the subprime market which has forced the most foreclosures."
While the crisis continues, real estate brokers and mortgage lenders see the problem as potential opportunity for buyers. Agents won't list a property as being foreclosed, but they know some buyers are looking for distressed properties. Of course, the draw of foreclosed homes, especially to first-time buyers, is the lower price.
"The bank is not in the business of owning property and is looking to turn listings over as quickly as possible," Wright said. "Banks take a considerable hit by the foreclosure rates because they are significantly less than what the home is mortgaged for."
A foreclosure occurs when the ownership rights of a property are terminated often times due to a defaulted mortgage. In many cases homeowners took out adjustable rate mortgages with very low teaser rates which begin to adjust upwards and the monthly payments become too much to handle.
Wright says buyers don't have to look far to find which local properties are in trouble.
"A lot of people watch the legal notices in the paper or there are also lots and lots of Web sites," she said noting she does not list properties as foreclosed.
Web sites such as ForeclosuresMass.com list properties across the state which have been foreclosed and offer complete information on each.
According to Derek Beckwith, a spokesperson for the five-year-old company, the site works to educate the public on the best way to buy a foreclosed property as well as how to avoid foreclosure.
"Have I sold foreclosed properties? Yes. Have I listed them as foreclosed? No," Wright said. "But for the buyer, there are some fantastic properties out there, each individual property comes with it's own conditions."
That is likely to continue as property values continue to sink, and banks keep foreclosing on loans.
Though not all of the 2,729 foreclosures petitions filed in the Bay State in December will go through to a formal foreclosure, the increase in foreclosure rates hint at more trouble down the line, which means prices will stay low.
"It might have seemed like 2007 was one of the worst years for foreclosures in Massachusetts, but the rising number of petitions to foreclose suggest that 2008 — at least until midyear — won't be much better," said Timothy Warren, CEO of the Warren Group, which compiles the real estate data.
For the time being Warren finds it alarming how few options homeowners have when they run into financial trouble. Warren uses the phrase, "When you have that many shoes on sale, it's tough to sell the designer shoes at full price," to illustrate the home market and the struggles everyone is facing.
"What is most striking to me is that last year there were 30,000 properties which filed for foreclosure, so those 30,000 distressed properties hit the market and all the people were desperate trying to figure out what to do and if they could work something out," Warren said. "With all that angst and turmoil in the market, only 50,000 homes managed to sell statewide, so that should give a sense of the scale of what we are talking about here."
Though the news continues to be dismal, Wright sees some hope in the grim market.
"For potential first-time home buyers fortunate enough to have the money in the bank for a down payment, this is an opportunity," Wright said. "You can get a phenomenal buy around here with a little work or updating."
With the banks functioning as the owner and seller, there are deals to be had.
"In a generic sense, banks' immediate reaction is to secure and dispose of the property and people are aware banks need to get rid of it as quickly as possible, and everyone is looking for a steal when the lender is the owner," Welch said.
Area Foreclosures
2006 2007
r Amesbury 11 28
r Georgetown 3 5
r Groveland 2 7
r Merrimac 3 8
r Newbury 1 2
r Newburyport 4 11
r Rowley 1 6
r Salisbury 5 14
r West Newbury 0 2
