BOSTON
The state’s improving economy should help reduce foreclosures this year, right?
Not exactly. Some experts expect more foreclosures to be filed and completed in 2012 than in 2011. Lenders that were leery of dumping too many distressed homes on the market at once are becoming more willing to move properties through the pipeline.
“When the economy is showing some signs of improvement, (lenders) may decide to increase the rate of properties hitting the market,” said Thomas Callahan, executive director of the Massachusetts Affordable Housing Alliance in Dorchester.
“The chances of them selling (and) being absorbed in the real estate market are better with an improving economy,” Callahan said. “Ironically, we may continue to see an increase in the number of foreclosures while we see improving economic trends.”
The Warren Group, a South Boston-based publisher of real estate information, reported Tuesday that the numbers of foreclosure petitions and final foreclosure deeds filed last year were the lowest of any year in the past four years.
But foreclosure filings started rising, compared to 2010, in the final months of 2011 after dropping for much of 2011 in year-over-year comparisons.
Warren Group CEO Tim Warren said he expects more petitions to foreclose – the first step in the foreclosure process – and foreclosure deeds – the last step – in 2012 than there were in 2011.
Foreclosures declined significantly during the second half of 2010, and it has taken nearly a year for lenders to step up the pace again.
In August 2010, the state’s moratorium on how long a lender needed to wait before initiating foreclosure proceedings was extended from 90 days to 150 days. Partly as a result, Warren said the number of petitions to foreclose in the state dropped by more than half from September 2010 to October 2010.
Around that same time, big banks and other lenders were under pressure for sloppy record-keeping practices. Many of the lenders decided to put the brakes on foreclosures until they could make sure they had the proper documents in order.
Big banks were also reluctant to dump too many distressed properties on the real estate market at once. “If the real estate market was better, I think they would be foreclosing left and right, and turning this stuff over,” Warren said.
After a lull for nearly a year, the pace of foreclosures is definitely quickening again. The Warren Group reported that the number of completed foreclosures in the state dropped last year by more than 30 percent compared to 2010, but the number rose 56 percent in December from the same month in 2010. Likewise, the number of petitions rose 38 percent in December, even though the full-year number had dropped by 47 percent.
“We’ve had some improvement in jobs in Massachusetts,” Warren said. “(But) there are still quite a few people that are having trouble paying.”
Jon Chesto may be reached at jchesto@ledger.com.
READ MORE about this issue.