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Homebuyers Tax Credit Causes Jump In Foreclosures

Foreclosures came back with a vengeance in the month of March. New figures from The Warren Group show the number of homes taken back by lenders surged to 1,300 — more than 50 percent higher than the month before.

The last time that many homes closed in a month, it was 2008, the height of the first foreclosure crisis in Massachusetts.

Listen: Harvard Economist Nicolas Retsinas
http://audio.wbur.org/storage/2010/04/news_0422_foreclosures.mp3

More than 2,500 lenders also filed petitions to initiate new foreclosure processes — up over 20 percent from February.

"Lenders are not afraid to foreclose, and they’re doing so with gusto," said Vincent Valvo, of the real estate tracking firm The Warren Group.

Valvo says the main reason for the surging figures is the federal tax credit for home buyers. Banks are more willing to foreclose because other buyers are willing to snap up the properties.

"I’m not really sure that the government wanted that to happen," Valvo said.

Although the number of people losing their homes makes for grim news, Valvo says it's positive that their properties are going back into private hands that can pay for them.

"It's better for all of us that these properties move into private hands then they stay in the hands of lenders, mortgage companies, banks, or government agencies, weighing down the market for a long time to come," Valvo said.

This program aired on April 22, 2010. The audio for this program is not available.

Curt Nickisch Twitter Business & Technology Reporter
Curt Nickisch was formerly WBUR's business and technology reporter.

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