Senate hopeful Jeanne Shaheen tours foreclosed property in Rochester

The two-story wood-frame house at 13 Summer St. in Rochester was built right around the turn of the 20th century. Its white exterior is accentuated by an elegant bay window, and green recycling bins rest on the front porch. There are a total of seven rooms in the house, including three bedrooms, along with a bathroom nautically decorated with seashells and starfish. Snow is piled several feet deep on the back patio, and containers of laundry detergent still sit atop a washing machine in the basement.

But the house is empty, devoid of furniture or inhabitants. And although it is still in decent condition, no one seems interested in buying. It is one of many homes that has been foreclosed on in Rochester this year, and others will follow. The mortgage crisis has hit hard in the Lilac City, which experienced around 90 foreclosures in 2007—the highest number of any community in Strafford County.

Former Gov. Jeanne Shaheen visited the home on March 6 as she unveiled her proposal to ease the mortgage crisis afflicting New Hampshire and the rest of the nation. Shaheen, who hopes to unseat U.S. Sen. John Sununu in November, received a guided tour from real estate agent Irene Creteau, of Hourihane Cormier & Associates. Also in attendance was Rochester Mayor John Larochelle. 

Hourihane Cormier acquired the property from a bank that took over after the former owner failed to sell it. At the time of Shaheen’s visit, the house had been listed with Creteau’s firm for more than 30 days, at a price of just under $150,000. Creteau said the homeowner previously had the house on the market for 184 days.

That homeowner’s plight is not uncommon. And, as Shaheen pointed out, the implications stretch beyond the real estate market to affect several facets of the economy. Foreclosures lower revenues in local communities, decrease property values and increase taxes. They also negatively impact consumer confidence and reduce job opportunities in the construction field. In addition, lenders will be reluctant to dole out loans, even to families that can afford them.

“Unfortunately, it’s not just about these families who are struggling to stay in their homes,” Shaheen said. “We also need to address this problem because it’s having much broader effects on the economy.”

According to a report released in December by the N.H. Housing Finance Authority, banks foreclosed on around 2,000 homes in New Hampshire last year. For the first 10 months of 2007, foreclosure deeds averaged 159 per month in the state, up from fewer than 40 per month in 2005. Fewer than 500 homes faced foreclosure in New Hampshire in 2005, a number that has quadrupled just two years later.

The sharp increase in foreclosures appears to be related to a parallel increase in subprime mortgage lending. Subprime lending is largely unregulated and offers high returns for investors at the expense of high-risk borrowers, many of whom have poor credit, large debt, inadequate incomes or a combination of the three. Too often, the borrowers find that they cannot afford to cover their rapidly rising interest rates.

In the conclusion of its report, the N.H. Housing Finance Authority warns that if the credit crisis worsens, it could send the country plummeting into recession. “If this were to happen, the real estate market and ultimately the foreclosure problem could worsen significantly in the nation and New Hampshire,” the report concludes.
 According to Shaheen, some 2,700 foreclosures are expected to hit New Hampshire in 2008. The Democrat said she was disappointed that Sen. Sununu, a Republican, did not support this year’s Foreclosure Prevention Act.  

“It is long past time for action in Washington,” she said.

Shaheen’s proposal outlines a number of steps aimed at easing the crisis. The first step would allow housing finance authorities to issue bonds for refinancing unworkable subprime mortgages. Other steps would include increasing the cap on mortgage revenue bonds, increasing pre-foreclosure counseling for homeowners, and allowing Fannie Mae and Freddie Mac to expand, with tighter regulation and independent oversight. The proposal would also allow bankruptcy judges to temporarily modify the terms of subprime mortgages that were entered into before January to promote settlements with borrowers.

The former governor’s proposal also lays out steps for preventing future mortgage crises by tightening regulations on lenders. One such step entails establishing minimum standards for subprime loans, requiring mortgage brokers to prove that potential borrowers will be able to pay off their loans. Another requires lenders to disclose long-term borrowing costs to borrowers. Lenders would also be required to report on the status of their loans in their annual filings.

Sununu, who is completing his first six-year term as senator, supports the Federal Housing Administration Modernization Act, which passed the U.S. Senate in December and is now being deliberated by the U.S. House of Representatives. The legislation is aimed at updating the FHA program to provide more affordable options for low-income and first-time homebuyers trying to get a mortgage for a new home or refinance an existing mortgage.

Sununu will host a “New Hampshire Home Mortgage Workshop” with Nashua Mayor Donnalee Lozeau on Saturday, March 29. The workshop will outline resources available to New Hampshire homeowners and offer assistance to people interested in refinancing their mortgages or buying their first homes.

Shaheen, who announced her candidacy for U.S. Senate in September, does not face an opponent in the Democratic primary. Former candidate Jay Buckey dropped out of the race early in February, following in the footsteps of former candidates Steve Marchand and Katrina Swett, both of whom have pledged their support for Shaheen. Democrats have taken aim at Sununu as a vulnerable Republican target in the 2008 election.

As Shaheen described her proposal outside the home at 13 Summer St., a school bus pulled into the driveway and delivered children to neighboring houses. The lively scene illustrated the importance of enabling families to retain their homes.