Massachusetts Foreclosure Rate Rises, City of Boston Takes Action

October 19th, 2006

It’s no secret that Massachusetts has one of the slowest real estate markets in the country right now. Falling home values and a flooded market have led to a state of stasis where not much is moving in Massachusetts at all.

In fact, the one thing that is moving is the interest rate. As the market slows and interest rates rise, more homeowners are finding it difficult to keep up with their monthly mortgage payments. In fact, the rate of foreclosure in the greater Boston area alone is currently nearly ten times higher than it was in 2004.

City officials, in partnership with a number of local banks, have teamed up to set aside $100 million to donate to people in bad loans who need to refinance. During the housing market upsurge that occured earlier in the decade, many homeowners got involved with Adjustable Rate Mortgages, attracted by the low initial cost and the propsect of owning a home so “easily”. Now that these rates have begn to rise, and people are unable to sell their homes in the flooded market, people are stuck with mortgage payments they cannot afford, which leads to foreclosure.

By refinancing, a homeowner can instate a new, fixed rate loan, for which payments will not rise and fall month to month. Many are applauding the city’s effort to get the market back on track. However, for foreclosure investors, the prospect of buying a pre-foreclosure in the greater Boston area may have gotten a little bleaker.

[via the Boston Herald]