Overdue mortgages linked to risky loans

The Boston Globe reports:

Subprime mortgages were lauded for helping more Americans than ever buy homes during the housing boom earlier in the decade. But four years after their popularity took off, the loans are backfiring. More homeowners are no longer able to afford their payments, which typically rise sharply two years into the loan. In 2006, lenders filed 19,487 foreclosure notices against Massachusetts homeowners, surpassing the record high of 17,000 filings in 1991, during the state's severe recession.

New research by the Federal Reserve Bank of Boston on the rising tide of foreclosure filings in the state found that subprime loans are a major culprit. While subprime loans make up 12 percent of all mortgages in the state, they accounted for more than two-thirds of foreclosure filings in the third quarter of 2006, the most recent data available . Most delinquencies were high-interest subprime loans with adjustable rates, which increase payments as interest rates rise. Homeowners hit the hardest were in the working-class cities of Brockton, Springfield, Lawrence, Fitchburg, and Lowell, the Fed said.

Amazing,nationally we aren't in a recession and Massachusetts has higher foreclosures than 1991.We predict that Massachusetts real estate has more downside.Much more.