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New foreclosures spike in Massachusetts

The number of foreclosure petitions filed in Massachusetts spiked 35 percent in 2012. In 2011, lenders filed 12,634 foreclosure petitions against Massachusetts residents. In 2012, that number was just over 17,000. A foreclosure petition is the first step that a bank or other creditor must take in order to start the process of repossessing a home, and it is thus a sign of a homeowner in some degree of financial distress. In light of this spike, some might begin to wonder how long this struggling economy will last.

There was, however, some good news to balance this statistic: the number of completed foreclosures dropped by 13 percent, putting Massachusetts on par with the national trend. Nationwide, fewer people are actually losing their homes in foreclosure. Moreover, again consistent with the national trend, those filing for bankruptcy in Massachusetts also dropped significantly, by about 19 percent.

Some experts see the drop in bankruptcies as a sign of a recovering economy, indicating that homeowners have more confidence that they can eliminate debt and pay their mortgages in their present economic circumstances. Even though the 2005 reforms curbed many people's ability to file for a Chapter 7 bankruptcy, people oftentimes will turn to bankruptcy when they are struggling to make a mortgage payment. Fewer bankruptcies therefore also mean fewer foreclosures.

Experts in fact see a turnaround in the Massachusetts real estate market, pointing to rising sale prices and more sales.

It is not clear what precipitated the 2012 upsurge in foreclosure petitions. Some subtly suggested that perhaps lenders were catching up after allowing a lull in foreclosures. In any event, however, the overall economic outlook for homeowners in Massachusetts appears to be positive.

For those homeowners who need to stop foreclosure or protect themselves from a looming one, bankruptcy may be their best option.

Source: GoLocalWorcester, "MA foreclosure starts up 35 percent in 2012," Jan. 29, 2013

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