Worcester named 29th among Forbes Magazine’s worst homeowner debtors in the country

By Chet Williamson

When it comes to homeowner debt, Worcester is among the worst. The city was recently ranked 29th in Forbes Magazine’s worst of the worst.

While acknowledging that it’s no secret that homeowners with sub-prime mortgages have taken a beating, the article notes that those who have combined their mortgages with “home equity loans, second loans or both,” are in the most trouble.

The April 17 issue cites Worcester on the list just below Phoenix, Salt Lake City and Raleigh and just above Louisville and Baltimore.

To compile their information, the editors of Forbes say that the magazine relied on U.S. Census data to determine which of the country’s largest 150 housing markets had the highest percentage of outstanding home equity and second loans.

They state that, “because neither on its own signifies a homeowner’s level of overextension, we combined those data with housing price trends taken from the National Association of Realtors, to gauge which markets are experiencing steep price drops.”

The list factored in the categories of median home price, price change, total mortgages, second mortgages or home equity loans, percentage, both second home mortgages and home equity loans, that percentage and total. For example, Worcester has a median home price of $259,000, a total of 198,819 total mortgage volume and 1,898 in foreclosure.

Scott Hayman, housing director for the city manager’s Division of Neighborhoods and Development says, “What they are talking about are all the underpinnings of foreclosure. Yes, we are right up there in a number of categories. As you know values are declining every day.”

Forbes also indicated that the popularity of the sub-prime lending products has grown in popularity in the last 15 years, pointing out that “by the Federal Reserve Board’s count, the total amount of outstanding home equity loans grew from $260 billion in 1995 to $970 billion in 2005.”

Hayman says, “Given that the whole sub-prime lending and mortgage foreclosures are still with us, we are still in the thick of it. We still have at least a year or two before we balance out.”

Hayman also notes that the city remains proactive in dealing with the issue of foreclosure.

“We are working closely with the Mass. Housing Partnership and commencing discussions with local banks in response to these dire statistics,” he says. o