Foreclosure starts in Massachusetts jumped to their highest point in more than a year as lenders worked through a backlog of delinquent mortgages set aside while new state and federal regulations went into effect.
Foreclosure petitions filed by lenders, the first step in the property-seizure process, more than doubled in March from a year earlier, the Warren Group, a Boston real estate tracking firm, reported Thursday. It was the first increase in 16 months.
Timothy M. Warren Jr., chief executive of the Warren Group, said the sharp increase did not indicate trouble in the housing market, which generally has experienced strong sales and rising prices in recent years. Instead, lenders are catching up on foreclosures put on hold for months as they studied new regulations.
“A clogged pipeline is opening up a bit,” Waren said.
Massachusetts passed a law in 2012 that forced lenders to consider loan modifications before foreclosing on certain homes, but the regulations were not finalized until last summer. The federal Consumer Financial Protection Bureau also wrote new mortgage rules, which took effect in January.
“The whole foreclosure process has really changed in the last 12 months,” said Debbie Sousa, executive director of the Massachusetts Mortgage Bankers Association. “There’s a lot more steps involved. It really is intensive and time-consuming. You’ve get to get it right.”
Jon Skarin, senior vice president of the Massachusetts Bankers Association, said the jump in foreclosure starts is not surprising. “There was a good case this would happen as lenders got the process moving again after they digested all the law changes and legal decisions,” he said.
Lenders filed 660 foreclosure petitions in March, up from 283 a year earlier, but well below the activity during the last recession. In March 2008, lenders initiated nearly 3,000 foreclosures.
Not all foreclosure petitions end with a property seizure; some may result in loan modifications or sales. In March, the number of completed foreclosures fell 15 percent.
“Overall the tide is rising, but it has not been lifting all boats,” he said. “There continue to be communities and households getting left behind.”
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