Foreclosure: we're not out of the woods yet

The foreclosure topic has received significant attention and it remains one of New Hampshire’s hottest issues. To keep you informed on the topic, New Hampshire Housing has published an update to our "Mortgage Delinquency, Foreclosures and Subprime Lending in New Hampshire: How Big is the Problem?" white paper that was originally released this past December. The original study as well as the latest update can be found on the Authority's Web site at www.nhhfa.org/rl_subprime.cfm.

Unfortunately, we must report that the delinquency and foreclosure problem in New Hampshire has deepened over the past year. The pace of foreclosure deed recordings continues to climb over prior years, and the rate at which foreclosure initiations (properties entering the foreclosure process) are taking place in New Hampshire has increased to a rate similar to that of foreclosure initiation in New Hampshire during the early 1990s, which occurred during the region’s last significant real estate recession. Current data also indicates the mortgage foreclosure and delinquency problem in New Hampshire is ongoing and not confined to subprime lending, with delinquency rates (loans with installments past due) and foreclosure initiation rates for all conventional mortgage loan types rising. On a positive note, the statewide portfolio of subprime loans now makes up a shrinking portion of the overall mortgage market, as well as a decreasing portion of loans in foreclosure. Further, it is important to note that compared to the early 1990s, there has not been an over-building of housing in New Hampshire and the state is in a better position to weather the current economic downturn.

Information in the update not addressed in our original analysis of the foreclosure problem in New Hampshire is a breakdown of foreclosures by building type (single family and multi-family buildings). This analysis is important because in urban areas across the nation, renter households in multi-family buildings are becoming victims of the foreclosure crisis in growing numbers, frequently with no advanced warning and with as little as 30 days to find new living quarters in a tightening rental housing market. While in New Hampshire multi-family property foreclosures accounted for only about 8% of all foreclosures in the state in 2006 and 2007, as many as 23% of housing units affected by foreclosure may be renter occupied. Though New Hampshire's percentage of foreclosed multi-family properties is relatively low compared to many other states, this problem is likely to worsen over the next year due to the significant increases in energy costs that impact all households. Rising energy costs are expected to have an even greater impact on multi-family rental property owners who are paying for heating costs as tenant incomes have remained flat and their ability to pay has essentially capped rents.

Finally, the national foreclosure initiation rate has reached historic highs and the rate of foreclosure initiation has increased in each of the New England states; however, the rate in New Hampshire remains at or below the rate in all other states in the region except Vermont, and lower than New England and the United States on average.