Lowell Deeds

The latest on real estate recordings and new technology from the Middlesex North Registry of Deeds in Lowell

May 26, 2009

Will Rising Unemployment Cause Foreclosures to Rise?

by @ 10:04 am. Filed under Real Estate

A recent New York Times article described how the “third wave” of foreclosures was now arriving around the country, especially in regions that have sustained the highest increase in unemployment. The “first wave” were the riskiest subprime mortgages that failed almost immediately. The “second wave” were adjustable rate mortgages that had articificially low monthly payments for the first year or two but would then spike dramatically upward, a process that left many borrowers unable to keep up with the new, higher payments. This “third wave” is mostly prime mortgages, those granted to folks with the best credit. But as the rest of the economy stalls and these homeowners lose jobs or have overtime cut or fulltime positions shifted to parttime, many more homeowners are falling behind on their mortgage payments.

The foreclosure statistics here at Middlesex North do not yet show this trend. The number of foreclosure deeds recorded to date during this May (20 for entire district, 10 of which are for Lowell) is down dramatically from the same period in 2008 (60 for entire district, 37 of which were from Lowell). Hopefully this is a sign that the foreclosure crisis has hit bottom and not the calm before a rising unemployment driven surge in foreclosures.

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