While foreclosure numbers are still low here compared to harder-hit Boston neighborhoods—and actual foreclosures are likely to be down in 2009—mortgage payments apparently continue to be a struggle for a significant number of Jamaica Plain residential property owners.
As of Oct. 28, at least 68 foreclosure petitions had been filed for residential properties in JP, according to statistics provided by the Warren Group, a regional real estate tracking firm that publishes Banker & Tradesman.
That is up from 59 in 2008. If petitions are filed at the same rate as they have been in the last 10 months, 82 will be filed in 2009—slightly lower than the 95 filed in 2007, according to Warren Group records.
Foreclosure petitions are the first step in foreclosure proceedings in Massachusetts. They are filed after a mortgagee defaults, failing to make a payment for at least 90 days.
The Warren Group statistics indicate that many homeowners were able to avoid moving from default to foreclosure. Only 18 residential properties were foreclosed on in 2007, 24 in 2008 and 11 so far this year—meaning JP is on track for about 13 foreclosures in 2009.
According to the City of Boston’s Foreclosure Trends 2008 Report, released this summer 64 percent of “petitioned properties” were foreclosed on last year, citywide. According to Warren Group numbers—tracking petitions and deeds in the 02130 Zip Code—the rate was only 40 percent in JP last year, and is only 16 percent so far this year. That definition of JP is also incomplete, leaving out the Egleston Square area.
According to the Warren Group information, over the last three years, multi-family homes and condominiums have been the lion’s share of foreclosure actions. This year, 34 of the petitioned properties have been multi-family homes, many of which are likely investment properties. Twenty-three petitioned properties were condominium units. Condos have also been the most foreclosed-on properties in JP, so far peaking at 11 of 24 total foreclosures last year. This year so far there have only been four foreclosures on condominiums.
Housing market analysts and foreclosure prevention advocates said the trends apparent in the JP numbers—a dip last year and up-tick this year in foreclosure petitions, and a drop in actual foreclosures this year—make sense in terms of current market trends.
Last year’s dip came directly in the wake of the passage of a state “90 day right-to-cure law” in May of last year, which allows owners some time between the date of their default and the filing of a foreclosure petition, according to the city report.
What most refer to as predatory lending practices—signing new homeowners up for mortgages that they will likely not be able to afford payments on—was the initial cause of the foreclosure crisis. But the rising unemployment rate—now at around 9.3 percent in Massachusetts—means that more and more owners who borrowed at more reasonable interests rates are finding themselves struggling.
“People are in trouble because the unemployment rate is rising and income is stagnating,” said Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy at Northeastern University.
“Predatory lending is still out there. We are still seeing “homeowners struggling with [subprime mortgages] coming in,” said Bill Minkle, head of the Egleston Square-based non-profit Ensuring Stability through Action in our Community (ESAC), which runs a foreclosure counseling program.
But, Minkle said, “With unemployment rising, we will see a rise in foreclosure filings.”
Still, JP is far from the top of anyone’s when it comes to neighborhoods affected by the foreclosure crisis. The neighborhood’s foreclosure rate paled in comparison to Dorchester, Hyde Park, Roxbury and Mattapan, where hundreds of homes were foreclosed on in 2008, according to the City of Boston’s 2008 foreclosure report.
And Bluestone and Minkle both said they currently do not expect the rise in foreclosure petitions to translate directly into a rise in foreclosures.
“Foreclosure deeds are going down because there is a glut” of foreclosure petitions, Bluestone said. Foreclosure is a costly and time-consuming process for lenders, providing “an incentive for them to find ways to avoid foreclosure,” he said.
Additionally, as the Gazette has previously reported, the JP housing market has remained robust, providing an incentive struggling for JP property owners to stick it out through hard times as well as good conditions for refinancing.
Citywide, the housing market has stabilized, and the value of area homes is only down about 5 to 7 percent from pre-crisis levels, Bluestone, the author of the Boston Foundation’s 2009 Boston Housing Report Card, said.
In the 2008 report card, Bluestone raised concerns that the home prices were falling too fast. That trend could have exacerbated the foreclosure crisis as homeowners found themselves paying off mortgages that were costing significantly more than their property was worth, he recently told the Gazette.
It is often worthwhile for owners who are “under water”—paying off loans that cost more than the value of their homes—to “walk away” and let their property get foreclosed on, Bluestone said. Lower values also mean less equity for owners, limiting their options for refinancing, he said.
Citywide housing price stabilization at such a high level does present challenges moving forward, he said. “We could have trouble attracting and retaining young people because Boston is less affordable in a relative sense than places where prices have fallen much further,” he said. But, “The way to protect against that is to produce more supply.”
And JP is moving forward on that front, most notably with high-profile residential development projects moving forward in the Hyde and Jackson Square areas.
In the meantime, Minkle said, ESAC’s phone is “ringing off the hook. We are very busy,” he said.
He said ESAC does not track what neighborhoods calls are coming from, so he could not say if there has been an increase in calls from JP.
Other JP trends
As was the case in 2007, the majority of JP foreclosures in 2008 were in northeastern JP, with a concentration in the corridor between Washington Street and the Southwest Corridor. (The city foreclosure report incorrectly includes that area as part of Roxbury.)
The city map indicates a similar but wider-spread pattern for foreclosure petitions, with the Pondside and Jamaica Hills neighborhoods showing a much lower concentration of petitioned houses than the rest of JP.
The Smith brothers, Roger and Douglas, who have had foreclosure petitions filed for over 30 rental properties they own in JP, have apparently been able to continue to avoid having any of their properties foreclosed on, according to detailed foreclosure deed information provided by the Warren Group.
As the Gazette has previously reported, the brothers have escaped foreclosure throughout the crisis by refinancing their loans and selling their properties.