By James Lomuscio
Foreclosure activity in Westport appears to be on the rise over last year, according to data released by the Town’s Clerk’s Office. In the first seven and a half months of 2012, the foreclosure numbers are about equal to all of 2011.
As of Aug. 15, the number of foreclosures so far this year was seven, the same amount as it was for all of 2011. And the number of homes with pending litigation against them from lenders, a term called lis pendens, is 42 so far compared to 43 for all of 2011. Many are in the $1 million to $2 million range.
“So the activity has increased from 2011 to 2012,” said Town Clerk Patricia Strauss.
She added that while the jump is a cause for concern, the data is not as bad as it was for 2010 when there were 94 lis pendens and 20 foreclosures.
Realtor Judy Szabak, a ReMax broker who is also a WestportNow real estate columnist, stresses that looking just at the yearly foreclosure numbers does not give the full picture of the real estate landscape.
“Lis pendens are extremely important because they are the first step for the banks to regain their assets,” she said.
Meanwhile, those selling their homes, as well as real estate agents, have to be aware of competition from foreclosed homes not yet put on the market, she said.
“This shadow inventory is something that we have to be concerned about,” Szablak said. “It has an impact on sales and property values.
“They’re sitting in the bank inventory waiting to go on,” she added. “This is inventory working in the shadows of the real estate market, and there could be another 100 properties.”
Out of the shadows are two foreclosed REOs (real estate-owned) homes currently listed on a multiple listing service: a Bayberry Lane home on the market for $1,995,000 and a house on Long Lots Road selling for $699,000.
The Bayberry Lane home had sold for $2.28 million in 2004.
Meanwhile, the State Judicial Branch has two pending Westport auctions set for Sept. 29,—a home on Sterling Drive for $650,000 and another on Valley Road for $310,000.
While a bump in foreclosures this year is a cause for concern, Szablak says, it is nowhere near as severe as what has been posted on some Internet real estate sites.
One states there was almost a 30 percent jump in Wesport foreclosures from May 2011 to May 2012.
Vincent Marino, a foreclosure attorney for Bridgeport-based Cohen & Wolf P.C. with offices in Westport, attributes the increase in foreclosures for high-end homes from Greenwich to Fairfield to “unemployment, underemployment and health issues.”
“A lot of these people have leveraged themselves based on their present income, and now they are finding themselves in situations that they can’t afford,” says Marino, whose clients are homeowners, as well as lending institutions.
“In many situations, the first mortgage has been followed by a second mortgage, and the values have deceased significantly.
“A home worth $1.75 million five years ago might be worth between $950,000 to $1.1 million today, so people are finding it more difficult to resolve their distressed situations, and they’re facing foreclosure,” he added. “It’s not a good situation.”
Still, it is not all gloom and doom, says Marino. In Connecticut, if the foreclosed property is the borrower’s primary residence, “there is a mandatory mediation that takes place as part of the foreclosure process.”
“And in some cases, borrowers can find what was an unaffordable mortgage payment is now an affordable one,” said Marino. “It’s not a refinance. It’s a modification.”
Under the modification process, a borrower who qualifies can have is or her interest “decreased down to 2 percent” based on the ability to pay. The annual mortgage payments cannot exceed one-third of the annual income, he said.
Marino explained that a homeowner making $100,000 and having a hard time making a $4,800 a month mortgage payment, one that was no problem at a time of bonuses, can have the payment lowered to about $2,500.
Marino said last year he handled between 40 to 50 foreclosures in Fairfield County, mostly representing homeowners.
In Westport, he said he is currently handling “about a half-dozen,” most in the $1 to $2 million range. So far, two have received modifications. Marino says he is still fighting for the others.
Bloomberg News reported last week that Connecticut’s foreclosures are up 139 percent from last year to 1,544 properties. The result is a backlog that makes banks wait 656 days to seize a home, the article states, citing RealtyTrac, Inc.
Marino disagrees, saying there is no definite waiting period. He said that the length of time depends upon the aggressiveness of the lender vs. the resourcefulness of the borrower.
“In the old days it was after 30 days you get a phone call, 60 days you get a letter and 90 days you get a foreclosure,” he said.
“Today, it could take a year to get a foreclosure, and I think the courts have been quite efficient at moving things along as most of the cases are routine.”
