MIDDLETON - Anthony Whiteman has found a way to spare his family's home from the auction block.
His three-family house at 116 Forest St. was advertised to be auctioned off next Monday due to foreclosure. Thanks to a helpful family member, however, Whiteman "overnighted" a cashier's check last week, which should stave off the auctioneer - at least for now - and save him $800 a month.
"We just paid up so we can come out of foreclosure," Whiteman said.
An intestinal ailment put him in and out of the hospital and kept him out of work. With no short-term disability insurance to act as a cushion, Whiteman fell behind on his monthly mortgage payments, resulting in a foreclosure filing.
Whiteman's situation is becoming more common among North Shore residents who are straining to pay mortgages amid a landscape of rising interest rates and declining property values. Local foreclosure filings increased 71 percent for the 12-month period that ended in February over the previous year, according to ForeclosuresMass.com. Statewide, foreclosure filings were up nearly 70 percent.
Most foreclosure filings are settled before a home is auctioned off - either the property is sold, borrowers come up with fresh cash, or both parties negotiate a new repayment schedule.
Jeremy Shapiro, president and co-founder of ForeclosuresMass.Com, said a number of factors are driving the increase, including adjustable-rate mortgages, whose low introductory teaser rates have been replaced with double-digit ones.
A flat real estate market is also hampering those who want to sell to get out of debt. Home sales were up slightly in February, the Massachusetts Association of Realtors said, but prices were down 4.1 percent from February 2006 to February 2007.
Some borrowers can actually owe the bank more than their home is worth, Shapiro said.
"They cannot refinance, they cannot sell, and they cannot afford to stay in their home," Shapiro said.
Another problem is subprime loans, those that require little money down but can come with high interest rates. Those are usually made to borrowers with shaky credit. State officials last week called for better regulation of subprime loans.
'Bad luck'
Whiteman said Friday what put him into foreclosure was "a trail of bad luck with the house," including his poor health, which kept him from his job as a food-service director at a Danvers assisted-living facility.
His three-family house at 116 Forest St. was advertised to be auctioned off next Monday due to foreclosure. Thanks to a helpful family member, however, Whiteman "overnighted" a cashier's check last week, which should stave off the auctioneer - at least for now - and save him $800 a month.
"We just paid up so we can come out of foreclosure," Whiteman said.
An intestinal ailment put him in and out of the hospital and kept him out of work. With no short-term disability insurance to act as a cushion, Whiteman fell behind on his monthly mortgage payments, resulting in a foreclosure filing.
Whiteman's situation is becoming more common among North Shore residents who are straining to pay mortgages amid a landscape of rising interest rates and declining property values. Local foreclosure filings increased 71 percent for the 12-month period that ended in February over the previous year, according to ForeclosuresMass.com. Statewide, foreclosure filings were up nearly 70 percent.
Most foreclosure filings are settled before a home is auctioned off - either the property is sold, borrowers come up with fresh cash, or both parties negotiate a new repayment schedule.
Jeremy Shapiro, president and co-founder of ForeclosuresMass.Com, said a number of factors are driving the increase, including adjustable-rate mortgages, whose low introductory teaser rates have been replaced with double-digit ones.
A flat real estate market is also hampering those who want to sell to get out of debt. Home sales were up slightly in February, the Massachusetts Association of Realtors said, but prices were down 4.1 percent from February 2006 to February 2007.
Some borrowers can actually owe the bank more than their home is worth, Shapiro said.
"They cannot refinance, they cannot sell, and they cannot afford to stay in their home," Shapiro said.
Another problem is subprime loans, those that require little money down but can come with high interest rates. Those are usually made to borrowers with shaky credit. State officials last week called for better regulation of subprime loans.
'Bad luck'
Whiteman said Friday what put him into foreclosure was "a trail of bad luck with the house," including his poor health, which kept him from his job as a food-service director at a Danvers assisted-living facility.
His house has two apartments that generate cash, but for the first two years he owned it, he had problems with former tenants. He wound up paying $15,000 to $20,000 to clean up after they left, he said, including fixing damage to a swimming pool liner.
Whiteman also blamed some "creative financing" through a mortgage broker.
When he and his family bought the house for $430,000 in 2004, they were lured by the prospect of rental income and bit off more than they could chew, he said. As a result, their debt-to-income ratio was off. After making the down payment, they had to take two mortgages, one for $300,000 and another for $80,000, Whiteman said.
The first mortgage carried a reasonable rate, but the second carried an 11 percent interest rate and a payment $900 more "than what we should have paid if we had the same rate on both mortgages."
As a result, Whiteman's total monthly payment, which he did not reveal, was more than he could handle.
In Middleton, where Whiteman lives, there were 10 foreclosure filings from March 2005 to February 2006, but in the same time period this year, there were 15 such filings, a 50 percent increase, according to a ForeclosuresMass.com.
It is not just in the suburbs where foreclosures are a problem. The online subscription service, which tracks foreclosures proceedings at their start, says foreclosures were up 239 percent in Salem from 2003 to 2006. There were 33 foreclosures in Salem four years ago and 112 filed last year.
Ed McDonald, president of Salem Five Mortgage Co., said he is not worried about the apparent spate of foreclosures statewide at his division of Salem Five Cents Savings Bank. Salem Five has six more foreclosures than it did the same time last year, McDonald said.
"We probably have a few more foreclosures from last year, but we have a great default management group that works with our customers, and we avoid foreclosure at all costs," he said.
McDonald said foreclosure activity usually picks up with an increase in joblessness, which does not appear to be the case right now. Many foreclosures are related to homeowners with adjustable-rate mortgages who are beginning to realize what hit them, he said.
"There are a lot of homeowners out there who don't know what happened," McDonald said.
Shapiro said homeowners should contact their lenders "at the earliest possible moment" if they get behind. Having a home sold at auction can wreck your credit, Shapiro said.
Despite all his problems with his home's financing, Whiteman said he would not live anywhere else.
"The house is really an awesome house," he said.
Material from The Associated Press was used in this report.
Foreclosures increase on North Shore
City/town March 1 2005-Feb. 28 2006 March 1 2006-Feb. 28 2007 Percent increase
Beverly 45 78 73.33
Boxford 6 15 150
Danvers 35 65 85.71
Hamilton 7 9 28.57
Ipswich 15 25 66.67
Manchester 12 12 0
Marblehead 16 36 125
Middleton 10 15 50
Peabody 80 144 80
Salem 77 121 57.14
Swampscott 29 37 27.59
Topsfield 1 9 800
Wenham 3 9 200
Total 336 575 71.13
Statewide 11,493 19,487 69.56
Source: ForeclosuresMass.com
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