Foreclosures are up.
Town Clerk Barbara Serfilippi reports 14 foreclosures had been filed with her office as of Monday, July 21 — more than in all of 2013.
“We’ve got 14 and it’s only mid-way, and last year for the whole year we only had 13,” Ms. Serfilippi said.
Every one is troubling, she said, and makes her emotional.
“Another one, somebody’s home — very difficult,” Ms. Serfilippi said.
“It seems a little bit high for Ridgefield,” said Patrick Walsh, who handles foreclosure cases for the Main Street lawfirm Hastings, Cohan & Walsh.
He did some quick math, calculating from 14 in half a year to a full 12 months.
“It could be upward of 28 this year, if the numbers hold out,” he said. “That would be a lot. That would be too bad.”
Fourteen foreclosures by mid-July also stands out compared to research finance board Chairman Dave Ulmer did on the number of foreclosures in town, dating to before the financial crisis that started in 2007.
Mr. Ulmer found 12 foreclosures in 2013, 15 in 2012, 19 in 2011, 18 in 2010, 13 in 2009, 7 in 2008, 7 in 2007 and 1 in 2006.
The 14 foreclosures are more than last year, just one less the year before, and not far from the highs Mr. Ulmer found — 19 in 2011, and 18 in 2010.
“Some of 2014 we believe to be ‘catch-up’ as banks were stopped from overdoing it in the last couple years,” he said.
“Many now are paying pretty large fines for that,” he added.
From one perspective the rise in foreclosures runs against the general logic of the marketplace.
“Recent housing market pickup also suggests a recovery, if it holds up,” Mr. Ulmer said.
“People who lose jobs or can’t make payments don’t have to foreclose when they can sell,” he said.
“There are probably a number of people who were waiting to sell until prices went up, so they can now afford to sell and retire where housing is much cheaper.”
Mr. Walsh, the attorney, also felt a rise in foreclosures was counter-intuitive.
“The market gets a little better and then you see this spike in foreclosures — it makes no sense,” he said.
Ms. Serfilippi expects more foreclosures are coming.
“There’s a new law that before they file a lis pendens or a foreclosure, the firm has to file a foreclosure registration,” she said.
“Thirty-eight foreclosure registrations from Jan. 1 to July 21,” she said. “There’s 38. And some of these were foreclosed, but there’s still others out there that are pending.”
Roots in crisis
She thought many of the foreclosures stemmed from troubles that date to the financial crisis of 2007 and 2008.
“I think what’s happened is there were a lot of these pending since 2008, and finally some of the banks are coming out and finally foreclosing on the property — sometime it does take this long,” she said.
The last several years have been a different world from before the financial crisis — widely regarded as having been triggered by the burst of a housing bubble inflated by lax mortgage practices.
Foreclosure numbers are much higher lately.
“Oh, yes, absolutely,” Ms. Serfilippi said “You hardly saw a foreclosure — maybe one or two a year. But not like this. Not like what we’re seeing now, since 2008 and forward.”
Lenders with backlogs of troubled loans might feel the market — a bit stronger than two or three years ago — offers opportunities for the resale of foreclosed properties.
“They had so many in pre-foreclosure, and now the banks are finally getting down to it,” Ms. Serfilippi said.
First Selectman Rudy Marconi saw it as a sign of the changing economic times.
“A lot of people have been hired,” he said, “and the banks are now saying, lending institutions are now saying ‘Let’s get this cleaned up.’ ”
People in foreclosure aren’t out of options.
“A lot of people get out of these,” Ms. Serfilippi said. “A lot of them refinance, or they do mortgage modifications, or short sales.”
The federal and state governments have programs designed to make sure banks work with borrowers who are having trouble, and help people stay in their homes.
“Right now there’s pretty much an automatic stay, where lending institutions are required to mediate, to potentially come up with a solution to keep people in their houses,” he said.
Banks can do it.
“There’s no rhyme or reason why they can’t make deals with customers, why they can’t help more people,” Mr. Walsh said.
“Quite frankly,” he added. “You don’t have a problem with the smaller banks — the smaller banks work with the customer. It’s the big banks that could care less.”
In recent years State Attorney General George Jepsen has made Connecticut a party to three separate state-federal settlements in which larger lenders — mortgage servicers, who buy up loans from other institutions — agreed to work with troubled borrowers, and to compensate people who can show they were victims of abusive foreclosure practices.
The largest was an agreement reached in February 2009.
A release from Mr. Jepsen’s office at that time described the settlement as “a landmark $25-billion joint federal-multistate agreement with the nation’s five largest mortgage servicers over foreclosure abuses and fraud, and unacceptable nationwide mortgage servicing practices.”
The lenders involved in the agreement were Bank of America, Citibank, JP Morgan Chase, GMAC and Wells Fargo.
“It provides more than $190 million in relief to Connecticut homeowners and the state, and imposes new consumer protections on future mortgage loan servicing practices,” Mr. Jepsen’s office said.
The most recent of the three settlements came last month, when the state joined a $550-million state and federal agreement with the mortgage servicer SunTrust.
And in December 2013, Connecticut became a participant in a $2.1-billion state-federal settlement for foreclosures violations by Ocwen Loan Servicing.
All the agreements are designed to push the lending institutions to work out loan modifications, including principal reductions, for troubled borrowers.
Smaller numbers of borrowers, who were victimized by fraudulent and abusive foreclosure practices, may be entitled to cash payments under the three agreements.
Jaclyn Falkowski, director of communications for state Attorney General Jepsen, said even banks that aren’t part of any settlements know they should work with borrowers to avoid foreclosures.
“All banks continue to offer loan modifications and other relief to qualified customers,” she said. “We encourage any Connecticut homeowner having difficulty with their mortgage to call the state Department of Banking’s Foreclosure Assistance Hotline at 877-472-8313 to learn about state and federal help available. They should also contact their loan servicers to discuss the possibility of achieving an affordable loan modification.”
Mr. Marconi said foreclosures can have a variety of outcomes.
“A lot of these are worked out,” he said, “and hopefully for people in Ridgefield this is the course that ends up taking place — the course where there’s some kind of a settlement, whether it’s family that steps up to the plate to help, or the lending institution restructures the loan, or any combination thereof — and not an actual foreclosure.”