At a State House press conference, foreclosed homeowners and dispossessed tenants testified that they are being crushed under the weight of collapsing financial institutions.

The Massachusetts Alliance Against Predatory Lending (MAAPL) is an umbrella group of community organizations and agencies, formed to grapple with the housing situation.

Senator Dianne Wilkerson (D-Boston), and Representatives William Lantigua (D-Lawrence), Elizabeth Malia (D-Boston), and Frank Smizik (D-Brookline) are among the legislators introducing the emergency legislation.

Senator Wilkerson stated, “On a national level the focus has been on bailing out the financial institutions that created this crisis. While the Massachusetts Legislature has passed legislation to try to address the foreclosure problem, it is painfully clear that it has not been enough. Whole neighborhoods are turning into ghost towns. We must do more.”

As of January, Massachusetts had the sixth highest rate of foreclosures in the country, a nearly 200 percent increase over the number of foreclosures a year earlier.

Almost 8,000 foreclosure petitions were filed in January alone, compared with 20,000 for all of 2007. Hardest hit have been communities of color which were deliberately targeted by predatory sub-prime lenders.

The legislative proposals include a 180-day moratorium on repayment of unfair sub-prime loans. These loans typically feature low introductory rates that later dramatically increase, interest-only features that build no equity, or approval without regard to a borrower’s ability to repay.

Another bill provides protections to tenants living in foreclosed properties who are being evicted after their landlords have been foreclosed. The tenants must be current in their rent and in good standing. Foreclosing banks are now evicting such tenants, with no one to replace them. Surveys show buildings sitting empty for many months.

The third emergency bill grants homeowners a day in court before they lose their homes. Homeowners in Massachusetts can now lose their homes with no chance to contest the foreclosure—even if lenders have violated the law or miscalculated the payments. Twenty-nine states, including Maine and Connecticut, already have such a judicial foreclosure process.

Len Raymond, of Homeowners Options for Massachusetts Elders (HOME), declared that “elderly tenants are often victims of mortgage scams and lose their homes as a result, never having had the opportunity to tell their story to a judge.”

Introducing the speakers at Tuesday’s press conference, Boston Councilor Chuck Turner of the Green-Rainbow party said, “A key role, if not the key role, for government in a democracy is to assure that the interests of justice are served. Passage of this legislation is the key to achieving justice in this situation.”

This is the big one

Last week Citizens Housing and Planning Association (CHAPA) released a compilation of current and proposed state, local and federal initiatives on foreclosures.  CHAPA brings together real estate and development interests with housing agencies, nonprofits and professional housing advocates.

According to the CHAPA briefing paper, “most subprime loans were cash-out refinances rather than initial purchase—eighty percent in 2002.”

Two or three percent of all U.S. subprime mortgages are found in Massachusetts, putting it among the top 15 states in terms of its share of the total, but far behind California’s 25 percent share.

CHAPA says it plans to establish a web-based information clearinghouse, which will include regular updates to the briefing paper.

Download the CHAPA briefing paper

While the media continues to focus on the “subprime” aspect, the developing housing and financial crisis has already reached far beyond that initial stage. The Bridge was far from the first to describe the broader implications of current crisis which began to affect housing in 2006. However....

Read the 2006 Bridge article on the housing bubble

The table below updates one published in the 2006 Bridge article showing trends in the median price, in dollars, of single-family homes sold in the Cambridge and Somerville area. These are figures from the weekly Banker & Tradesman. They indicate only general trends since they represent different time frames and in some cases small sales volumes.

The current housing situation is part of a worldwide financial crisis, the depth and meaning of which is yet to be revealed. The debate over this is carried on daily by political observers, professional investors—and no doubt, some shills as well—on the free Market Oracle site.

click for Market Oracle

Sale prices down, rents up?

The Sunrise Multifamily Rental Market Report, released on November 23 by Sunrise Management & Consulting, reported an average $40 per month rent increase for eastern Massachusetts. By that time, sales volume and prices of houses and condos in most towns were already dropping dramatically.

In the current Bay State Apartment Owner, Debbie Swanson quotes Terry Scott of Apartment Realty Advisors/New England as saying that actually, “[T]he credit market crisis is having a positive effect on the rental market.”

In the same article Brian Sykes of Deutsche Bank Berkshire Mortgage says, “the best multifamily deal right now for financing is one with an upside story: repositioning of a property with a plan to upgrade units and/or common areas, with a strategy to increase rents.”

Deutsche Bank was targeted last year by City Life/Vida Urbana because it was one of the major lenders evicting lower income tenants after foreclosing on their landlords.

Partial List of MAAPL member organizations

Association for Community Organizing for Reform Now (ACORN); Action for Boston Community Development (ABCD); Boston Tenants Coalition; City Life/Vida Urbana; Community Labor United, Dorchester People for Peace; Ensuring Stability through Action in our Community (ESAC); Fair Housing Center of Greater Boston; Greater Boston Legal Services; Green-Rainbow Party of Massachusetts; Homeowners Options For Massachusetts Elders (HOME); Mass Law Reform Institute (MLRI); Massachusetts Coalition for the Homeless; Union of Minority Neighborhoods; United for A Fair Economy