A Hornblower Squibnocket lot may be auctioned
A foreclosure auction is scheduled tomorrow for a Squibnocket lot that is part of the extensive holdings of the Hornblower family. The property, assessed by the town of Chilmark at $6,680,300, may be the largest foreclosure in Island history.
The Hornblower property is owned by Lot 4 Martha's Vineyard Realty Trust, whose sole and current trustee is David M. Hornblower. It is a 5.1-acre parcel with no buildings or improvements. Since 2003, the property has been used as collateral on four different mortgages, according to records at the Dukes County Registry of Deeds. The foreclosure auction was advertised by the Stoneham Savings Bank, which holds a $3.8 million loan on the property, issued in March 2006. In March of this year, Quest Corporation loaned the trust $611,000. Just 14 days later, Stoneham Savings Bank recorded an order of notice, a legal document that makes public the bank's intention to take possession of the property according to the terms of its mortgage.
A mortgage executive at Stoneham Savings Bank declined comment. The attorney handling the foreclosure said he was not authorized to comment.
Location, location, location
While local bankers and real estate executives say foreclosures are a hot topic, and they expect to see more foreclosure sales in the near future, there is no sense of impending doom in the local markets. There is also a consensus that Island lenders and real estate brokers did not get caught up in the loose lending practices that many blame for the dramatic rise in mortgage defaults.
"We are somewhat insular," said Paul Watts, senior vice-president at the bank of Martha's Vineyard. "There is no question competition from off-Island banks in the last two or three years was pretty heavy. They were pretty aggressive. They found ways to make loans that the Island banks might not have."
Judy Federowicz, owner of Coldwell Banker Landmarks Real Estate, is currently tracking about 30 Vineyard properties in various stage of the foreclosure process. She, and other real estate executives, say they have seen several "short sales," recently from off-Island banks and mortgage companies. In a short sale, the mortgage holder will cut its losses by selling a property at a reduced price, in order to avoid a foreclosure.
"They do have a bottom line, but they aren't giving them away either," said Ms. Federowicz. "We have not crashed, we have moderated."
Local industry leaders say greed and unethical business practices combined to entice some off-Island lenders to target the high value Vineyard real estate market, and those companies, along with the people who borrowed money from them, are now paying the consequences.
"Our loan portfolio is in as good shape as it has ever been," said Fielding Moore, chief executive officer of the Edgartown National Bank. "We tend to look at customer relationships, not at the income. We did our underwriting to make sure people could pay back the loans."
Sharon Purdy, president of Sandpiper Realty, says she hopes that the Island market will escape the bubble bursting decline in home values.
"I guess I'm looking at it a little more positively than most people," said Ms. Purdy. "I have a little different perspective, having seen a much worse situation in the 1980s."
Across Massachusetts, foreclosures are sharply up, reflecting the painful shake out of the credit crunch. Massachusetts now ranks tenth of the 50 states in the rate of foreclosure, according to RealtyTrac, a company which features foreclosure sales.
In 2005 and 2006, the number of foreclosure deeds recorded hovered at about 400 per month across the state. A foreclosure deed often signifies that a lender has taken legal possession of a property from an owner who has defaulted on a loan. While foreclosure deeds do not always result in an actual foreclosure, they are a widely watched barometer of foreclosure trends in the lending marketplace.
In the final part of 2007, and continuing into this year, the number of foreclosure deeds show a dramatic upward spike. In April of this year, 1,334 foreclosure deeds were recorded, compared to 464 for the same month last year, according the the Warren Group, a financial publisher that tracks local foreclosure rates.
Here on the Vineyard, foreclosures are up, but not at the same dramatic rates as the rest of the state. In a three-year period from 2003 to 2006, 10 foreclosure deeds were recorded in Dukes County. In 2007 alone, eight foreclosure deeds were recorded. In the first five months of 2008, five have been recorded.