LOWELL, MA - When Osman and Rose Bangura bought a two-family home three years ago at the peak of a housing boom, they saw a good investment in the $400,000 Colonial, just a quarter mile from the Merrimack River and the renovated 19th century textile mills now helping to fuel Lowell's rebirth. For a couple years, they lived upstairs while rent from a downstairs tenant helped cut hundreds of dollars off the monthly payment they would have faced if they'd bought a single-family home.
But, like many owners of southern New England's nearly 320,000 two and three family homes, the Banguras ran into trouble. Their monthly payment on a pair of adjustable rate mortgages jumped from about $2,900 last summer to nearly $4,200 - out of reach for a couple with $50,000 in annual income, supplemented by $1,150 in monthly rent from their tenant, a single mother of two children.
Similar stories are playing out across the densely packed cities and pricey housing markets of southern New England, where generations have found older two- and three-family properties more affordable routes to home ownership than single-families. "We are praying we will be able to keep it until the home crisis starts getting better, and maybe we'll be able to refinance the loans," said Osman Bangura, who juggles two jobs and has managed to stave off foreclosure so far with the help of a local nonprofit.
The housing stock that makes southern New England unique is getting hit much harder in the housing slump than the region's single-family homes, due in part to lending standards that are more stringent than for smaller and less costly single-family properties. Massachusetts, home to 220,000 two-families and three-families often known as "triple-deckers," has seen the steepest decline among the three southern New England states where such homes make up significant portions of the overall housing stock.
Last year, more of those homes in Massachusetts had foreclosure petitions filed against their owners than were sold. Court records listed 6,460 such petitions the first step leading to potential foreclosure compared with 5,622 sales that closed, according to an Associated Press analysis of data from the Warren Group, a Boston-based publisher of regional real estate data. Although two- and three-families make up nearly 12 percent of the state's housing stock, they accounted for 28 percent of foreclosure petitions last year.
And while sales of single-family homes in New England's most populous state fell 10 percent last year, two-family home sales dropped 35 percent, and an even sharper 43 percent for three-families. In Connecticut and Rhode Island, such homes also have fallen into a deeper slump than single-families, though the discrepancy is not as extreme.
The multifamily problems have forced renters out of their homes as well as their owner landlords. In foreclosures, mortgage companies can force out renters, regardless of whether they've kept up with lease obligations, if the firms don't want to serve as a landlord.
The National Low Income Housing Coalition, a Washington-based affordable housing advocacy group, estimated in May that at least 45 percent of the housing units in the final stage of foreclosure in Massachusetts, Connecticut, New Hampshire and Rhode Island were occupied by renters whose landlords were behind on payments.
Although rental income can go a long way toward defraying an owner's payments on a two- or three-family home, risks can be greater than with single-family homes. A few months without a tenant can leave the owner facing default. 'It definitely makes the situation more complicated when you're dealing with a multifamily," said Emily Rosenbaum, director of Coalition for a Better Acre, the nonprofit that's assisting the Banguras.
Source: Boston Herald