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Foreclosures On The Rise In Connecticut

KENNETH R. GOSSELIN

February 20, 2010

Home sales and prices appear to be gaining some stability in Connecticut, but a sobering report Friday showed that the number of residential borrowers struggling to make mortgage payments is higher than at any other time in the past 30 years.

Foreclosures and seriously delinquent home loans in Connecticut jumped more than a full percentage point to 8.1 percent in the last three months of 2009, compared with the previous quarter, according to the report from the Mortgage Bankers Association.

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

Industry experts said that the fourth quarter wasn't without some encouraging signs, however. The number of residential borrowers who missed one payment fell in Connecticut, and nationally — an indication that the mortgage crisis might be easing.

But housing counselors in the Hartford area said Friday that they have seen little evidence of a let-up in borrowers falling behind, a growing number from white-collar, professional households with fixed-rate mortgages.

"We don't see any slowing in sight," said Penny Trick, a foreclosure specialist at the Housing Education Resource Center in Hartford. "Every time I hear bad economic news, I say, 'I know my job is safe.'"

Trick said that more than half of the people seeking help have either lost their jobs or have gotten their hours or overtime reduced.

That's what happened to Paul and Nicole Mozeleski of Vernon.

For 10 years, they had no problem paying the mortgage on their modest, three-bedroom cape. Paul Mozeleski was self-employed, working as a subcontractor transporting documents for banks. His wife worked in the billing department of Hartford Hospital.

The couple took out a second mortgage to renovate their kitchen. Still, their monthly payment — including escrow for taxes and insurance — was a manageable $1,400 a month.

Then last year, Paul Mozeleski lost the contract, and he was forced to take a maintenance job at Bradley International Airport for less than half of what he was making. The couple quickly fell behind in their payments.

"Money is always a problem when you don't have it," Paul Mozeleski said.

The Mozeleskis are working with counselors at the Housing Education Resource Center and hope to work out loan modifications.

One of every 12 mortgages was in foreclosure or 90 days past due in Connecticut in the last three months of 2009. As of Dec. 31, Connecticut had 42,012 residential mortgages in that group.

That compares with 7 percent in the third quarter, or one in every 14 mortgages.

The numbers do not include foreclosures that have already been completed in the recession, a growing tally for which exact figures are not readily available.

Erin Kemple, executive director of the Connecticut Fair Housing Center, said that attendance at the center's once-monthly foreclosure prevention classes has tripled since the classes got underway in the fall.

On Tuesday, even in the snowstorm, there were 18 in the class — the highest number ever — and another handful called to reschedule, she said.

The classes have since been added in New Haven and New Britain. And now there are calls for the classes in Bridgeport, Norwich and Waterbury, Kemple said.

Connecticut's foreclosure and delinquency level for the most recent quarter was still below the national rate of 9.7 percent and about the same for New England.

Nationally, all loans past due were 10.4 percent of the total, compared with 10 percent in the third quarter. On a seasonally adjusted basis, all loans past due nationally were 9.5 percent of the total, slightly lower than 9.6 percent in the previous quarter.

Foreclosure troubles still remain concentrated in four states: California, Nevada, Florida and Arizona.

In Connecticut, the housing market recently has shown some signs that it is at, or at least near, a bottom.

In December, for the first time in two years, the median sale price rose, capping a year in which sales gained some momentum.

But economists say it will take job growth to create a sustained housing recovery.

Connecticut's unemployment rate rose to 8.9 percent in December — the highest level so far in this recession. And some economic forecasters say that it won't be until later this year or even into 2011 before the state starts to consistently add jobs.

Donald L. Klepper-Smith, an economist at DataCore Partners Inc. in New Haven, said that he forecasts employment growth this year.

"You can't get meaningful traction in the housing market until you get traction in employment," Klepper-Smith said. "I think we're getting close to a turning point."