Real Estate Foreclosures Climb New England Economy Slides
BOSTON (AP) _ When real estate attorney Neal Weinstock goes to parties and is asked what he does for a living, he says, ″I used to do closings. Now I do foreclosings.″
As the slide in the New England economy takes the real estate market down with it, foreclosures are on the rise.
Developers and real estate entrepreneurs with unsold property are running out of money to pay off their loans. Homeowners suddenly out of work or overstretched can’t make the mortgage.
The state Land Court in Boston handles about 65 percent of the foreclosure filings in the state. Court recorder Charles Trombly said far more foreclosures are sought than ever go through. The bitter end often is averted when the lender and the borrower make new arrangements.
Even so, the numbers are doubling. Last year, there were 1,402 approved foreclosure sales, up from 546 in 1988 and 250 in 1987.
In the 1988-89 fiscal year, the court received filings for 5,977 foreclosures. In the fiscal year ending June 30, there were 11,602 filings. This year, as many as 1,500 filings are coming in each month, Trombly said.
The court does not record foreclosures by category - whether they are for a family home or a residential tract or condo project. But, said Trombly, ″a lot of these are single-family homes. A lot of it is developers. An awful lot of it is condos.″
Weinstock said that at first, foreclosures over the last 18 months appeared to involve mainly entrepreneurs, developers and their investors. Now, he said, ″you are seeing the early throes of residential foreclosures.″
Robert Eisenberg, president of New England Financial Resources, is in the business of helping banks manage their debts and assets.
″What we’re seeing now is the real estate market has softened across the board,″ he said. Foreclosed office buildings, shopping centers and recreational properties are being joined by factories and warehouses, he said.
Boston auctioneer Barton K. Hyte, who is near the end of the line in the foreclosure business, said the losers are ″a lot of people who bought condos and single-family houses at the top of the market. A lot of people are walking away. They can’t afford it anymore.″
A typical scenario he described is the youngish two-career couple who bought a house in recent years in the $200,000-to-$250,000 range. Then the wife gets pregnant or one of them loses his or her job. They can’t make the payments, but they also can’t sell the house in a glutted market.
The lender closes in, and unless a deal is worked out, the home goes on the block. Usually the buyer is the bank that loaned the money in the first place.
″As one lawyer who deals in bank foreclosures said, most foreclosure sales are between the auctioneer, the bank representative and three squirrels,″ said Franklin Tucker, senior writer at Banker & Tradesman, a weekly publication covering the real estate, banking and commercial property business.
Just five years ago, Hyte’s auctioneer company handled at most two foreclosure auctions a week. This week, it will bring down the gavel on about 22 foreclosed properties.
″I don’t see it getting better,″ he said, while offering a brighter perspective. ″Investors that are sharp are starting to buy. There are a lot of deals out there.″