PITTSFIELD — The problems began when Dave lost the job he had held for 14 years one month after the birth of his fourth child.
After six months on unemployment, Dave found a new job. But after expenses, his new salary didn't pay enough to keep current with his mortgage payments.
"I had an outrageous interest rate," he said.
So he let his mortgage payments lapse. For five years.
During that five-year foreclosure process, his mortgage "was bought and sold twice," Dave said.
Fannie Mae had initiated foreclosure proceedings on Dave's house in June 2011, according to the Berkshire Regional Housing Authority.
"Dave," a Pittsfield resident who told his story on the condition his real name not be published, isn't the only Berkshire County resident to find himself in this situation lately.
Following a lull after new regulations were put into place following the subprime mortgage crisis, foreclosure activity is on the rise again in both Berkshire County and the state of Massachusetts. In the county, experts say this uptick isn't an issue of subprime mortgages, but rather the persistence of the long-standing economic "malaise" affecting the Berkshire economy.
The number of foreclosure petitions filed by lenders in the Berkshires in 2015 increased by 68.1 percent, from 116 to 195, according to the Warren Group of Boston, which tracks state real estate transactions. The filing of petitions marks the first step in the foreclosure process and indicates that a property is in distress.
In December alone, 22 foreclosure petitions were filed in the Berkshires compared to 11 in December 2014, a 100 percent increase. In January, lenders filed 20 foreclosure petitions in the Berkshires, compared to 13 in the first month of 2015, an increase of 54 percent.
Jim Hamilton, a foreclosure counselor with the Berkshire County Regional Housing Authority, said he dealt with 55 default cases — situations helping financially troubled homeowners modify their mortgages — during the final six months of 2015.
"Of those 55, 45 were new cases," Hamilton said. "In that same time period the previous year, I had 29. So, quite a bit more."
In Massachusetts, the filing of foreclosure petitions increased 55 percent in 2015, according to the Warren Group. In December, lenders in Massachusetts filed 1,224 petitions to state Land Court, a 118.2 percent jump from December 2014 when 561 petitions were filed.
That trend also carried over to the new year: 924 petitions were filed statewide in January, a 49.5 percent increase from the 618 filed in January 2015.
The current numbers are far short of what they were during the last decade's foreclosure crisis — 2,724 petitions were filed in Massachusetts in December 2007, according to the Warren Group.
And in contrast to the number of foreclosure petitions that were filed in 2015, the number of foreclosure auctions and foreclosure deeds that were issued in the Berkshires last year barely rose at all. They both increased by less than 10 percent in 2015, although they jumped from 12 to 27 in the 12 months ending in January, according to the Warren Group. The issuing of deeds marks the final step in the foreclosure process.
But the increase in the filing of foreclosure petitions locally is cause for concern.
Economists and housing officials believe that the current jump in lenders filing foreclosure petitions is related more to the persistent, underlying issues affecting the Berkshire economy than they are to the problems that created the subprime mortgage crisis.
"I don't really see any loans that are exactly subprime," Hamilton said. "But I see loans — you might describe them as marginal — where in a different atmosphere they might not have been written. ... There's not enough margin written into the loans that allows for an economic downturn.
"Berkshire County's economy is not like the rest of the state's," he continued. "It experiences downturns when the state experiences downturns and doesn't historically experience upturns when the rest of the state experiences upturns.
"Unemployment looks real good right now," added Hamilton, referring to Berkshire County's current 5.6 percent unemployment rate. "But take a closer, deeper look at that and in particular it is not so."
Cassidy Murphy, the Warren Group's editorial director, said the current rise in foreclosure petitions is "sort of a fallout of the crisis."
"It's less that the issues went away and more that people were putting off dealing with them," Murphy said.
"A lot of the foreclosures that we're seeing now have been in default for a very long time," she said.
Dave found himself in that situation. While in default, Dave said he received six certified letters from an office in Boston informing him that his lender was going to foreclose on his house.
"They even gave us a date when an auction was going to happen," he said.
Dave said he was scared, but when the lender continued to take no action he let the problem slide.
"I knew the day was coming," he said. "But five years go by and you get kind of comfortable. Maybe they won't come after me. Maybe they forgot."
When the foreclosure notice finally came, Dave turned to Hamilton and the Berkshire County Regional Housing Authority for assistance. Hamilton helped him work out a deal that allowed him to keep his home.
"If Jim wasn't Jim, I would probably be living somewhere else," Dave said. "He called the mortgage service, and he wouldn't take no for an answer."
In Massachusetts, the foreclosure process begins when homeowners default, or fall behind, on their mortgage payments. The lender then sends a notice to homeowners, a process known as "right to cure," which gives them 150 days to bring their mortgage payments current.
If the homeowner is unable to comply or can't work out a payment plan with the mortgage holder, lenders can file a foreclosure petition in state Land Court, a public pronouncement that the lender has the authority to foreclose on the mortgage it holds on that property.
Foreclosure auctions occur when the property is publicly sold. A foreclosure deed gives the buyer the legal right to a property after it has been sold at auction.
The entire foreclosure process "could probably take as little as nine months," said Hamilton. "But usually it takes a long time. Sometimes it can take years from the beginning of the default to the end."
Lenders are often willing to work with homeowners to resolve foreclosure issues before they go to far, according to Hamilton. But Hamilton said many people get into trouble because they ignore the initial warning signs from lenders and put off dealing with the problems. He refers to this process as "the ostrich syndrome."
"People need to pay attention to the notices that they get," he said. "They tend to panic. A lot of people call me and say, 'My house is in foreclosure.' It's not. It's in the process.
"They think the sheriff is going to be on the lawn in the next few days," he added. "That's not going to happen but they shouldn't ignore it. At some point, the hammer will fall."
Asked what advice he could give other homeowners who have fallen into foreclosure, Dave also suggested one deal with the problem immediately.
"Don't procrastinate," he said. "That's what I did. It's all about communications. My first thought was that the mortgage company was there just to take my house. It's not like that.
"The Attorney General's office said my mortgage server was one of the worst," he added. "But every time I talked to [my mortgage server], they said they wanted to help me. They didn't have to help me, but they did. I doubt they really want to take people's houses."
'An economic issue'
Brad Gordon, the executive director of the Berkshire County Regional Housing Authority, said homeowners involved in the current foreclosure process differ from those involved in the subprime mortgage crisis "because they weren't the most vulnerable."
"What happens is when you are becoming downwardly mobile, you have less income than you did before," he said. "It doesn't happen overnight that you go into foreclosure.
"For example, a North Adams Regional Hospital can close and you have enough resources that the impact isn't felt for two or three years," Gordon said. "But then all of a sudden, there's a wave of people because everybody's tapped out of their resources."
The problem is "really an economic issue," Gordon said.
"It relates to what we're seeing across the country, and in particular, in the older Northeast area where people are having tremendous difficulty finding employment that pays a wage that allows them to support their mortgage and their housing, in this case, home ownership," Gordon said.
"You hear that there are a wide range of jobs available, (but) their skill set doesn't necessarily align with the new economy. And they're being left behind.
"This is the canary in the coal mine," Gordon said. "It's symptomatic of larger economic challenges and instability for a larger percentage of the people who live in this community."
Williams College economics professor Stephen Sheppard, who studies the Berkshire economy, said foreclosures are generally a sign of economic "malaise" or "distress." Occasionally, they can signal more serious issues in mortgage lending practices, especially if these trends are happening at the same time around the country, he said.
However, Sheppard doesn't believe the current rise in local and state foreclosure activity is related to those factors. Although the Berkshire rates went up in 2015, Sheppard said the overall foreclosure rate for Massachusetts — one mortgage out of 1,548 — is much lower than the national average of one of 1,278 mortgages in foreclosure.
"That said, I don't want to shrug off the uptick in foreclosures in Berkshire County," Sheppard stated via email. "I don't think this represents a budding financial crisis like we had in 2007-2008. We have not seen the bubble-like surge in housing prices or other signals that would suggest a repeat of that unfortunate experience
"It does, however, signal a continued weakness in the local economy."
Sabic Innovative Plastics' decision to close its Pittsfield operations, the downsizing at Nuclea Biotechnologies, and the closing of retail concerns like Best Buy in the Berkshire Mall in Lanesborough and Price Chopper's North Adams market, combined with stagnant or declining populations, are all signs of local economic weakness, Sheppard said.
"It is this weakness that will continue to generate job losses, and people getting into financial predicaments where they cannot make their house payments and face foreclosure," Sheppard stated. "The economic weakness is a real problem that we have in the county that we need to take seriously and remain dedicated to fixing."
Higher in west
In Massachusetts, the increase in the filing of foreclosure issues petitions appears to be more prevalent in the western part of the state.
In October, increases in the filing of foreclosure petitions were higher in the four counties of Western Massachusetts compared to the previous October than every other county except Worcester, according to the Warren Group.
Berkshire County had the second highest increase during that time span at 70 percent, trailing only Hampden County at 94 percent. The state increase during that same time period was 51 percent.
"It has to do with the economics of the western part of the state, I think," Murphy said. "The western part of the state doesn't have the economic anchor of Boston. And, Boston's reach is so great that it goes way out into the middle part of the state. The economic reality is the east didn't fall as hard and came back more quickly. It didn't come back quickly in the housing market out there (in Western Massachusetts)."
Dave believes the elected officials in the Berkshires need to do a better job of bringing good paying jobs to this area.
"I've lived here all my life," he said. "When we grew up, we had England [Brothers] and North Street. Look around now and all we have are banks and Dunkin Donuts. There's no good businesses or good paying jobs around Pittsfield and the ones we do have are leaving.
"Politicians need to go out and attract businesses," he said. "They say they are and they are trying. But it's getting worse, not better."
Contact Tony Dobrowolski at 413-496-6224.