Vermont Foreclosures Continue To Rise

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(Host) The number of mortgage foreclosures in Vermont continues to rise, and experts expect that trend to continue into the near future.

But help is available for homeowners in trouble.

And more may be on the way, as VPR’s Susan Keese reports.

(Keese) Manchester Town Clerk Linda Spence says it’s gotten so she dreads opening the mail. That’s because of a recent rise in foreclosures in her town.

(Spence) "It’s far worse than people think that it is. And it’s affecting people’s lives. It’s heartbreaking really."

(Keese) In the first three months of 2010, Spence says five local properties have reached the point where the homeowners’ options are exhausted and the bank is ready to sell. That’s compared to only one in all of 2009.

State figures show a fifty percent increase in foreclosure actions initiated since 2008, though only perhaps a third of those result in auctions. In February alone, 159 foreclosures began.

Joshua Lobe is a South Burlington attorney who represents mortgage lenders in foreclosures.

(Lobe) "My sense, based on the numbers generated  by the Vermont Department of Banking and Insurance and the foreclosure referrals in our office, are that the volume probably peaked, maybe at the end of last  year or right about now. And I think that we’re starting on the way down,  though slowly starting on the way down at this point. "

(Keese) Lobe adds that Vermont’s foreclosure rate is among the lowest in the country.

Thomas Candon, the state’s deputy commissioner for Banking and Securities, says that’s true – though it’s probably not much consolation to the 1,900 households that went through foreclosure in 2009.

Candon says the national lenders who service 90 percent of mortgages in Vermont have been deluged with defaults in other states.

That resulting bottleneck may have bought time for some struggling homeowners. But Candon says the lenders seem to be catching up.

(Candon) "And therefore I think we’re going to be seeing some additional foreclosures, unfortunately."

(Keese) The bottleneck has also made it difficult for homeowners to reach their mortgage companies to work out loan modifications.

Grace Pazdan is a lawyer with Vermont Legal Aid, which represents low-income homeowners in foreclosure actions. She says she sees it all the time.

(Pazdan) "When they reach out for help they’re talking to different customer service representatives every time. They’re asked to send financial documents over and over again, and all the while their case is going through the legal process and oftentimes the foreclosure sale just happens before they can get in touch with anyone that has the authority to come to some sort of workout plan."

(Keese) A bill passed by the Vermont House this month would require mediation between lenders and homeowners before a foreclosure is filed.

Advocates say the bill, which is now before the Senate, could help reduce the number of foreclosures that go forward, just by getting all the parties together.

For VPR News, I’m Susan Keese.

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