The Boston Globe reports from Massachusetts. "The recent spike in home foreclosures in Massachusetts is caused primarily by falling housing prices, and not by rising mortgage payments, according to research released yesterday by the Federal Reserve Bank of Boston. The contrarian report suggests the common understanding of the foreclosure crisis is somewhat mistaken. Unaffordable loans don't cause foreclosures directly."

"Even as subprime lending became more common, even when people fell behind on mortgage payments - during the economic downturn in 2001, for example - foreclosures were rare because house prices continued to rise. In part, people were able to escape trouble by selling their homes at prices high enough to cover their debts."

"But the research also suggests that troubled borrowers tried harder to make the necessary payments, in the expectation they would profit eventually."

"Conversely, when prices started falling, people struggling to make payments had less incentive to find the money. Housing price movement 'plays a dominant role in generating foreclosures,' the report concluded."

"One implication of the report is that current attempts by local and federal officials to help borrowers may be ineffective."

"The number of foreclosures will be determined mostly by 'how far housing prices fall,' said Boston Fed president Eric Rosengren, who introduced the report yesterday."

"Rosengren highlighted a reason for optimism. On a typical subprime loan, the interest rate increases after the second year. Historically, most borrowers either sell or refinance before the rate resets. Rosengren said investors were never counting on a long-term income stream."

"'It's not like they expected the borrowers to be there for 30 years,' he said."

The Standard Times from Massachusetts. "U.S. Treasury Secretary Henry Paulson offered encouraging news for cash-strapped homeowners Monday, announcing that an agreement was near on a proposal to help thousands avoid foreclosures by temporarily freezing their mortgage rates."

"However, area banking and mortgage experts still have questions about how the freeze will be implemented and what its long-term effect will be on the mortgage industry."

"'There are a number of other people who took loans, who are able to make the monthly payment as it stands now,' said Tom Farmer, a spokesman for the state's affordable housing bank. 'A lot of these folks are working two jobs, three jobs, but they are making the payment.'"

"Questions remain on how a rate freeze would be implemented and what kind of effect it would have on the mortgage industry. 'I don't think you'd want to freeze them for a long time,' said Rick Presbrey, CEO of Housing Assistance Corp., a Hyannis nonprofit. 'Unless you have somebody who understands the long-term consequences of that, I'd be real careful with that.'"

"'A lot of these have been packaged and repackaged and sold on Wall Street to other investors, so you have to get everyone on board, which isn't always easy to do,' said Carl W. Taber, senior VP of Citizens Union Savings Bank in Fall River."

"David Brennan, senior VP of Cape Cod Five Cents Savings Bank agreed, adding: 'To some degree, those investors are going to be asked to take the hit.'"

The Metrowest Daily News from Massachusetts. "As of October there were more than 6,000 foreclosures statewide, three times the number of foreclosures during the same time period last year."

"'Lenders have apparently lost patience with borrowers, and it's pretty clear that a lot more Bay State homeowners are going to be getting a visit from the Grinch this year,' wrote Warren Group CEO Timothy Warren Jr."

"Eric Rosengren, president of the Federal Reserve Bank of Boston, said the recent foreclosures stemmed in part from interest rate spikes after two- to three-year lower introductory rates expired. Rosengren said lenders, market analysts and borrowers alike expected borrowers would sell their properties or refinance their mortgages before interest rates went up."

"'People expected that this product would have a problem if we got into difficult economic circumstances, but I don't think people anticipated that we would see as elevated a problem as we have under what happened in a fairly benign economic situation,' said Rosengren."

"He estimated that 26 percent of subprime mortgage holders would be able to refinance given their credit scores and current market conditions."

"'It's expected that foreclosures are going to increase in 2008 so it's just a question of what can we do at a state level to minimize that impact. I think no matter what the adjustable rate, mortgages are going to go up,' said Phil Hailer, spokesman for the state Department of Housing and Community Development."

The Republican from Massachusetts. "Statewide, there were 6,324 foreclosure deeds through October of this year, compared to 2,112 at the end of October 2006. There were just 2,634 foreclosure deeds in the state for all of 2006."

"Foreclosure deeds in October jumped 119.5 percent, from 333 last year to 731 this year. Deeds are also up from 673 in September 2007."

"Foreclosure deeds...means properties whose ownership has changed. 'The property belongs to somebody else,' said Katie Curnutte, spokeswoman for the Warren Group. 'They've either gone out to auction, or the lenders have bought them back.'"

"Meanwhile, more petitions to foreclose were filed in Massachusetts during the first three quarters of 2007 than during all of 2006, The Warren Group said."

"Through September, the latest for which statistics are available, foreclosure petitions in Massachusetts were 21,055, compared with 18,926 for 2006. In September, petitions were 2,509, up 34.1 percent from 1,871 a year earlier, the smallest percentage increase all year."

"'Petitions to foreclose in September might have fallen when compared to August, but I think we'll see petitions during the rest of this year continue their steady upward march,' said Warren. 'August's numbers were incredibly high, but we will probably see them matched before too long. Petitions may seem to have calmed a bit in September, but that is likely temporary. I think we'll see more record-breaking numbers before the end of 2007.'"

"Meanwhile, many Massachusetts homeowners with subprime mortgages are finding they need to find new lenders to refinance as they seek to avoid foreclosure. Eight of the 10 largest subprime mortgage specialists in Massachusetts are no longer lending in the state."

"Last Friday, Gov. Deval L. Patrick signed a compromise bill that aims to bar lenders from issuing mortgages that borrowers can't repay and creates a new licensing system for certain mortgage brokers."

The Daily News from Massachusetts. "Late last month, Gov. Deval Patrick signed a bill written by Sen. Susan C. Tucker Rep. David Torrisi to improve state oversight of the lending industry while providing resources for people at risk of losing their home."

"Tucker said the new law is meant to end abusive lending practices but won’t help everyone. 'The intent of our legislation was to put a halt to the whole game that created this crisis,' Tucker said. 'The bill is not a rescue plan.'"

"Every town in the Greater Newburyport area saw the number of foreclosures rise in the first 10 months of 2007 as the home financing crisis rapidly spiraled across the state. The ripple effect is likely to depress already declining home values even more, experts say."

"'There’s a ripple effect foreclosure sales have on overall values in eastern Massachusetts,' said Thomas Callahan, executive director of the nonprofit Massachusetts Affordable Housing Alliance. 'It depresses the market most severely on your block. But when there are so many foreclosures in Essex County, you can get to point that all of those foreclosures on the market have an effect of dampening values going forward.'"

The Boston Herald from Massachusetts. "As the subprime market collapse spirals, a local law firm has created a new group to deal with its impact. Boston-based Mintz, Levin, Cohn, Ferris, Glovsky and Popeo’s new subprime practice group has been meeting for about a month, group co-chairman Richard Moche said yesterday."

"'It’s the biggest financial story of the year, and the impacts will reverberate for a while,' said Moche about the subprime mess, and its ensuing international investment woes."

"Now, at Mintz, Levin, the group’s two dozen lawyers - who specialize in litigation and bankruptcy law, as well as governmental investigations, insurance coverage, and white collar crime - are helping financial institutions, investment groups and insurance companies deal with subprime-related legal matters."

"'There may be investors in companies that have subprime exposure, and the investors may feel that the companies didn’t adequately expose the risks,' Moche said about the firm’s potential clients. 'In other cases, there may be government investigations, where regulators are trying to assess the landscape, and people will need to respond, not necessarily as targets, but as witnesses.'"

"Mintz, Levin decided to form the group after three separate clients approached the firm for subprime-related help, Moche said. 'It’s been a very recent development,' he said."

The Union Leader from New Hampshire. "The continuing wave of foreclosures on subprime mortgages prompted U.S. Rep. Paul Hodes to meet with lenders, lawyers and regulators yesterday. Hodes termed the failure of subprime markets unprecedented in its scope, noting that it is being felt around the world by business and residential borrowers."

"Foreclosures, up 100 percent in almost every county in the state, come in the midst of the worst housing slump in 16 years, Hodes said. Predictions are that 4,300 homes will be taken by the end of 2009."

"Subprime lending quadrupled in New Hampshire over the past four years, rising from about 5,000 a year in 2003 to more than 20,000 in 2006, accounting for one third of all new mortgages in that time."

"A New Hampshire Bankers Association said in a study released in August that subprimes account for 70 percent of foreclosures, although they make up 13 percent of all mortgages."

"A proposed state law would impose licensing requirements on mortgage bankers, brokers and originators. 'We're trying to stop the monkey business,' Hodes said. 'Frankly, they were playing fast and loose with sound lending practices.'"

"Hodes said, 'the fact is we're going to have some rough times going forward with mortgage foreclosures. There is no easy way around that.'"

"Hildreth urged homeowners who suspect they will run into a problem with their mortgages to contact his office early. His office has held borrower conference sessions around the state, but turnout has been disappointing, he said."

The Eagle Tribune on New Hampshire. "The housing slump could translate into savings for some school building projects, according to managers at several construction companies."

"'It's sort of a buyer's market,' said Steve Ingram, an owner of Ingram Construction Co. in West Swanzey. 'If I had a municipal building or a school to do, or even a private building, this would be the time to do it.'"

"'Because of the fact there are fewer projects out there and work is less plentiful, contractors are willing to reduce (profit) margins,' he said."

"Statewide, construction company managers and owners are battling one another for jobs by cutting their profit margins, Ingram said. 'The margins are smaller,' he said. 'They just have to be.'"

The New York Sun. "New York City could face a budget gap of more than $6 billion for fiscal year 2011, the city comptroller, William Thompson Jr., predicts in a report issued yesterday."

"'New York City's economy is at a turning point,' Mr. Thompson warned. 'Turmoil in the nation's housing and mortgage markets has reverberated through the financial sector, threatening to produce a marked slowdown in local economic activity.'"

"Mr. Thompson said in the report that the 'collateral effects' of the housing crisis are likely to include financial losses and layoffs that will 'fall disproportionately on New York firms and workers.'"