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Organizing your community to bring public attention to builder’s bad deeds and seeking assistance from local, state and federal elected officials has proven to be more effective and much quicker for thousands of families. You do have choices and alternatives.  Janet Ahmad

Boston Globe - Nightmare for homeowners
Thursday, 05 April 2007

Nightmare for homeowners
Today, within a 14-block area, there are 11 property owners who can no longer afford their monthly mortgage payments, and the banks that lent them the money are reclaiming the properties. "It's so sad," said Linda Soucy, acting director of the Methuen Arlington Neighborhood Inc., a nonprofit that works to improve the economic, educational, and social levels of residents in the city's poorest neighborhood. "Some people were so eager to get into a home that they let other people bamboozle them."

The Boston Globe
Nightmare for homeowners
Foreclosures up in neighborhood

Every week, it seems, another family in Methuen's Arlington neighborhood loses its home.

Today, within a 14-block area, there are 11 property owners who can no longer afford their monthly mortgage payments, and the banks that lent them the money are reclaiming the properties.

"It's so sad," said Linda Soucy, acting director of the Methuen Arlington Neighborhood Inc., a nonprofit that works to improve the economic, educational, and social levels of residents in the city's poorest neighborhood. "Some people were so eager to get into a home that they let other people bamboozle them."

It's a scenario that is playing out throughout the country. After years of sharp increases in property values, and vigorous promotions of innovative mortgage packages designed to get people into homes for as little money as possible, the bottom has fallen out.

In Methuen, for example, a home purchased in 1992 for $130,000 is now selling for about $450,000.

By the early 2000s, some people wanted to secure a home before it climbed out of their reach, while others wanted to profit from the market's momentum. Money was cheap and plentiful, and mortgage companies tailored their programs to meet a variety of needs.

For people with no savings, for example, there was the 100 percent financing program that required no down payment.

For people whose monthly income was low, there was the interest-only mortgage that allows owners to make small payments, for a little while anyway.

For people with poor credit ratings, there were special sub-prime mortgages, whose interest rates started out low but shot up to double digits after a few years.

Many people who wouldn't have qualified for a traditional mortgage were able to buy homes. But often, after a few years of paying, say, 5 percent interest on their mortgages, the rate might jump to 15 percent -- causing the monthly payment to soar.

But while those payments climbed last year, home prices dropped.

In Lowell, Middlesex Registrar Richard P. Howe Jr. has noticed two distinct patterns.

The homeowners who financed 100 percent of their property "were put into deals that they thought they could swing, but the monthly payments were just too high," he said.

Other people frequently refinanced their home, pulling money out of their ever-more-valuable property, to pay for vacations and college tuition.

"These people are in a corner," Howe said. "They can't sell because they owe too much on their mortgage, and they can't refinance for the same reason."

Meanwhile, potential buyers are watching very closely, said Soucy, whose group offers homeownership courses to help people determine whether they afford to stay in the homes they purchased.

She noted, "People are scared."

http://www.boston.com/news/local/articles/2007/04/01/nightmare_for_homeowners/?p1=email_to_a_friend

 
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Outsized Ambition, Greed and
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