The Boston Herald reports from Massachusetts. "The Bay State’s battered but slowly reviving residential real estate market is poised to enter its most crucial test in years. The number of homes and condos on the market as the spring season starts is up over last year, according to the MLS Property Information Network."

"The number of condos for sale is up about 500, to 13,787, while the number of homes on the sales block has risen by about 1,000 to 25,026, MLS reports."

"Out in the suburbs, Kay O’Brien’s trying to sell a starter colonial in Weymouth, reduced in price from $333,900 to $309,000, among others. 'We have high hopes,' O’Brien said."

The Eagle Tribune. "The Newburyport Daily News reported Friday that the number of foreclosure filings were at the highest level in Massachusetts in the past 20 years."

"'In some cases you actually had negative amortization - people going deeper into debt over time, rather than paying off their mortgages,' Chuck Withee, senior lender at Amesbury's Provident Bank, told Daily News reporter Nick Pinto."

"'People get left without options,' Withee continued. For example, he noted, there's the plight of those who took advantage of adjustable rate mortgages: 'When your mortgage payments suddenly shoot up and you can no longer afford it, and your home isn't worth what it was when you bought it, what can you do?'"

The Boston Globe. "An explosion in overdue mortgages tailored to home buyers with less-than-sterling credit has driven foreclosure filings to record highs in Massachusetts."

"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."

"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 found that 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. 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. The trend is very disturbing, said Richard Walker, Boston Fed vice president. 'We're monitoring it closely.'"

"Tammy Amado obtained two mortgages to buy her Dorchester two-family home in January 2005 from a subsidiary of California-based Fremont General Corp. and one of the largest subprime lenders in Massachusetts. Despite having a good job, she fell behind on her payments."

"'I'm trying the best that I can,' said Amado, who found a second job last year."

"The interest rate on the bigger loan, for $380,000, was initially 6.4 percent and would rise after two years, according to her loan documents; a second, $89,000 loan had a permanent 11 percent rate. Her combined monthly payment: $3,225, the documents show."

"Amado said she paid her mortgage the first year and landed a tenant for the rental unit, but her budget became strained when her 11-year partner, father of two of her three children, moved out more than a year ago and stopped contributing to the mortgage."

"A Jan. 6 letter from the company servicing her mortgage said the rate on her mortgage was scheduled to increase March 1 to 9.4 percent, pushing her payment up $755. Based on 2006 income of $45,519 on Amado's tax documents, her loan 'probably would've become problematic' even with her partner's help, said Jason Wheeler, national refinance director at a nonprofit housing advocate. Amado applied to the agency for an affordable, fixed-rate mortgage to refinance her loan and save her house."

"Michael Fratantoni, chief economist for the Mortgage Bankers Association in Washington, cited specific local conditions for a spike in filings. 'Massachusetts' job growth rate is lower than nationally,' he said, adding that 'home prices there declined while nationally home prices are still growing.'"

"'You would expect Massachusetts to look worse, particularly among borrowers with credit problems,' Fratantoni said."

"'Wall Street encouraged these loans to be made, and it looks like homeowners are paying the price, and it looks like investors may pay the price,' said James Campen, economics professor emeritus at the University of Massachusetts at Boston. Campen said that HR Block Inc.'s subsidiary, Option One Mortgage Corp., joined Fremont as the largest subprime lenders in the state."

"In the past, home buyers applied to a bank, and either they qualified for a traditional 30-year loan or they were turned down. Those who qualified received a standard interest rate. Today, credit is easier to obtain from a broad range of poorly regulated mortgage companies, but at a price."

"'This is a whole class of mortgages that have never been tested in a down market,' said William Apgar, senior scholar at Harvard University's Joint Center for Housing Studies. 'There's a potential for quite a dramatic increase in foreclosures.'"

"The share of Massachusetts homeowners late on their house payments remains below the national average. But state foreclosures are 'going up faster' and the gap is narrowing, said Julia Reade, the Boston Fed senior research associate who prepared the report. 'Certain neighborhoods are being hit really hard but don't show up in the aggregate data.'"

"Since 2003, Brockton's foreclosure filings have tripled. Chief assessor Bernie Siegel partly blames subprime lenders for a 10 percent slide last year in Brockton house prices."

"First-time home buyers who get subprime loans don't understand the ramifications of homeownership, he said. 'It just becomes too much.'"