Vermont foreclosures up, lag New England, nation

BURLINGTON, Vt. --Home foreclosures in Vermont were up 24 percent for the first half of this year over the same period in 2006, according to state figures.

"There is no question that they have popped up," said Tom Candon, the Department of Banking, Insurance, Securities & Health Care Administration's deputy commissioner of banking.

Joshua Lobe, a lawyer who represents lenders in foreclosures, said Vermont's cooling housing market is largely to blame for the increase. Previously, home prices were rising sharply and sales were happening quickly, making it easier for homeowners to cash out of their properties when the need arose.

Many developed a "false sense of wealth" and took out second mortgages. "It's kind of like maxing out your credit cards," Lobe said.

Lobe said figures kept by his South Burlington firm, Lobe and Fortin, showed that foreclosures were up just 2.2 percent in Chittenden County, after a 37 percent jump from 2005 to 2006. But other counties, including Franklin, Rutland and Windsor, were seeing far more foreclosures.

"Our census is a reasonable snapshot at what I think goes on statewide," Lobe said. "The increase is dramatic."

While foreclosures are on the rise in Vermont, the state still has not seen as many as other parts of the country, Candon said.

The Mortgage Bankers Association's "National Delinquency Survey," reported that during the first three months of this year, about 2.8 percent of Vermont's mortgages were 30 days or more past due, compared to a New England-wide figure of 3.7 percent and a national figure of 4.3 percent.

Vermonters with "subprime" loans, generally people with poorer credit ratings who have had to borrow at higher interest rates, had a much higher rate of delinquent loans -- 11.7 percent -- than the statewide figure.

Candon said the state tracks foreclosures and other aspects of the mortgage markets to guard against predatory lending practices, which it has not found.

He said he fears the state's foreclosure rate could climb in the coming months. Interest rates are climbing, and homeowners who purchased with variable rate mortgages are starting to be locked in at higher rates, driving up their monthly payment, Candon said.

 

Article Source http://www.boston.com/news/local/vermont/articles/2007/08/04/vt_foreclosures_up_lag_new_england_nation/