Foreclosures, late mortgages fall in R.I., but homeowners still stressed

WHILE FORECLOSURES GENERALLY DECLINED from 2014 to 2015 in Rhode Island, some communities experienced increases. And the still-fragile nature of the economic recovery in the Ocean State still leaves many households spending a significant portion of their income on housing costs. / COURTESY HOUSINGWORKS RI
WHILE FORECLOSURES GENERALLY DECLINED from 2014 to 2015 in Rhode Island, some communities experienced increases. And the still-fragile nature of the economic recovery in the Ocean State still leaves many households spending a significant portion of their income on housing costs. / COURTESY HOUSINGWORKS RI

PROVIDENCE – Foreclosures have dropped in Rhode Island, but a large portion of the state’s mortgage holders owe more than their properties are worth.
Data released Monday by HousingWorks RI at Roger Williams University indicates that 1,182 residential foreclosure deeds were filed in Rhode Island in 2015, a 28 percent drop from 2014.
The percentage of seriously delinquent loans, those more than 90 days overdue, declined to 4.65 percent in the fourth quarter, a decline from 6.04 percent in the last quarter of 2014.
As a percentage of mortgaged housing stock, the cities of Providence, Pawtucket, Woonsocket and Warwick had the greatest percent of foreclosures in the fourth quarter, along with the town of Foster.
Mortgages with negative equity, called “underwater” mortgages, also remain problematic in Rhode Island, HousingWorks RI found. The percentage fell slightly, to 13.5 percent of Rhode Island mortgages, in the last quarter of 2015.
That puts Rhode Island in fifth of 50 states for the percentage of underwater properties. It ranks sixth for the percentage of loans that are seriously delinquent, according to HousingWorks RI.
Part of the problem is that although the state unemployment rate is dropping, the size of the labor force is dropping as well. And as of September 2014, 71 percent of the jobs that have been regained post-recession in Rhode Island pay less than $60,000 annually, according to the state Department of Labor and Training.
“The jobs that did come back to the state are often those that pay less,” said Jessica Cigna, research and policy director for HousingWorks RI.
As a result, many homeowners with mortgages are pressured financially, she said.
Thirty-six percent of Rhode Islanders with mortgages pay more than 30 percent of their income for housing costs, including utilities.
Although residential sale prices have increased in the past year, the appraised value of properties can lag months to years behind. As a result, homeowners with negative equity generally can’t sell, and this hampers the broader real estate market.
“They can’t sell their home if they would like to scale up, or scale down,” Cigna said.

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