Increase in Filings May Lead to Flood of Foreclosed Homes

by Peter Vernon on Foreclosure Crisis

Many homeowners in Pioneer Valley, Massachusetts are on the brink of foreclosures, causing another flood of foreclosed homes in the area. The number of foreclosure filings in the area rose in August. And many lenders are holding off taking over distressed properties for fear that they will be stuck with them.

The number of foreclosure petitions in Hampden County rose by 191.67 percent to 175 in August from 60 filings in the same month last year. Meanwhile, the number of repossession deeds dropped by 25.32 percent to 59 in August compared with 79 for the same month the previous year.

In Hampshire County, foreclosure petitions rose by 257.14 percent to 25 from seven. However, the number of actual foreclosures remained at 10.

In Franklin County, foreclosures were filed on 23 homeowners, an increase of 360 percent from five of August 2008. Similarly, the number of actual foreclosures jumped by 50 percent to nine from six.

Industry experts said that all over the region, people have lost or starting to lose their jobs, resulting to missing their mortgage payments and opening the gate to another flood of foreclosed homes. Meanwhile, one family is facing the risk of losing their 1,900-square-foot, four-bedroom house to foreclosure after they defaulted on their mortgage payment with Option One Mortgage Crop.

To delay getting into foreclosure, the family filed for Chapter 13 bankruptcy under which they are required to create a payment plan to be approved by the court. The family also decided to file a lawsuit against lender, Option One. Under the lawsuit, the family alleged that the lender misled them. They also seek recovery of late penalties and for the Option One to pay their legal fees.

A case like this demonstrated the worsening foreclosure problem in the region. Industry experts said that there should be a judicial foreclosure in the state. They explained that a judicial foreclosure would entail each foreclosure case to be brought before state judges.

Nationally, the number of homeowners who went into foreclosures jumped by over 5 percent. In July-September period, almost 938,000 properties went into foreclosure, compared with 890,000 in the second quarter. The flood of foreclosed homes filings are expected to reach 3.5 million in 2009, a drastic increase from 2.3 million the previous year.