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Troubled Mortgages Still At Record Levels In Connecticut

By KENNETH R. GOSSELIN

May 20, 2010

A record number of Connecticut homeowners still are falling behind in their mortgage payments and facing foreclosure, but a new report Wednesday shows those numbers leveling off in the first three months of the year.

Foreclosures and seriously delinquent home loans — 90 days or more past due — rose to 8.13 percent in the state in the first quarter, barely moving from 8.06 percent for the last three months of 2009, according to the report from the Mortgage Bankers Association.

Even so, the increase set a record high in Connecticut for the ninth consecutive quarter, according to the association, which has tracked delinquencies and foreclosures by state since 1979 as part of a national report.

One in 12 mortgages was in foreclosure or behind in payments by more than 90 days in Connecticut, the same as the last three months of 2009. That compares with one in 10 for the nation as a whole in the first quarter of this year.

The report comes as Connecticut's home sale market gained some strength this spring, with prices increasing for four straight months through March, on a year-over-year basis. The sales were driven by the homebuyer tax credit program and low mortgage rates.

Sales of foreclosed properties and those headed there have implications for the broader market because they can push down prices in the overall market. So far, however, the impact has been limited, unlike in other parts of the country.

Some experts said Wednesday not to read too much into the report because they expect the state's foreclosure troubles to deepen further before improving.

The Connecticut Fair Housing Center in Hartford, which represents clients in foreclosure cases and runs foreclosure education classes, has not seen any lessening in the number of homeowners with troubled mortgages.

"We're really not seeing a decrease in people calling us and signing up for our classes," said Erin Kemple, the housing center's executive director. "My fear is that it's just a lull, the eye of the storm."

Six months ago, enrollment in the housing center's classes in Hartford might have numbered 12 to 15 homeowners. Now, the classes draw 25 to 35 from across the income spectrum — including "former six-figure" households — and from both urban and suburban communities.

While foreclosures have been driven by job loss in the past 18 months, they could intensify later this year as pay option adjustable-rate mortgages and other "exotic" home loans reset and jack up monthly payments, Kemple said.

Ronald F. Van Winkle, an economist and the town manager of West Hartford, said he expects rising foreclosures in Connecticut to remain a concern at least through the end of the year.

"Although the economy is in recovery, it's not going to create a lot of jobs in Connecticut," Van Winkle said. "But as we enter 2011, we should be in better shape."

Connecticut's rate of foreclosure and seriously delinquent loans for the most recent quarter was still below the national rate of 9.5 percent but above the New England rate of 7.9 percent.

Nationally, all loans past due were 9.4 percent of the total, compared with 10.4 percent in the last three months of 2009. On a seasonally adjusted basis, all loans past due were 10.1 percent, up from 9.5 percent the previous quarter.

The differences sent mixed signals about whether delinquencies were improving.

"If mortgage delinquencies are not yet clearly improving, it also appears they are not getting worse," said Jay Brinkmann, the association's chief economist. "However, a bad situation that is not getting worse is still bad."