Driving through Belvidere the other day, I noticed quite a few “For Sale” signs stuck in front lawns. The same is true in my own Highlands neighborhood. Drawing any inferences from those observations will take a while; it all depends on how long it takes until the “Sold” placard is added to the sign.
The statistics from the registry of deeds paint a mixed picture. For the first 23 days of August, the number of deeds recorded for property in Lowell this year (100) is up slightly compared to last year (84). Mortgages, on the other hand, are up substantially, rising from 113 in 2011 to 175 in 2012. This suggests that more people are refinancing which, given the historically low interest rates available today, is a great thing. Those with re-written mortgages will either pay down their principal faster if they choose the same monthly payment or have more money to spend on other things if they opt for a reduced monthly mortgage payment. Either way, homeowners and the economy both win.
The bad news is that the number of Orders of Notice, the document that marks the beginning of a mortgage foreclosure, has more than doubled. In the first 23 days of August 2011 there were 18 Orders of Notice filed for property in Lowell; for the same period this year, that number is up to 47. Why the big jump? A few months ago the Massachusetts Supreme Judicial Court issued its decision in a big foreclosure law case. The shorthand name of the case was “Eaton” but neither that nor the issue involved are all that important. What is important is that many lenders were holding off on foreclosures pending the decision. Once the decision was issued and lenders were assured that it didn’t invalidate their mortgages, they were free to follow through on a backlog of bad loans that had been on hold for months. Taking a look at the mortgages being foreclosed, I found that most were from 2006 to 2008 which tends to support the theory that they are loans that have been bad for a while. You don’t want to understate the problems a big increase in foreclosures will cause (displaced families, vacant homes, declining values in the neighborhood) but if this is just a one-time upward bump and not the start of a new trend, that would be somewhat less bad than the alternative. Nevertheless, this is a statistic that bears close watching over the coming months.