The upside of home foreclosure

Buyer gets a bargain, hope replaces blight

Henrique Fernandes fell in love with the three-story red house with large rooms and an expansive backyard. The Cape Verdean immigrant envisioned his children running outside to play and his extended family celebrating holidays together.

It didn’t matter that the home sits on Hendry Street, a narrow avenue in Dorchester with boarded-up buildings, a neighborhood that has become notorious as the epicenter of Boston’s foreclosure crisis.

“I see a beautiful thing that has been mistreated,” Fernandes said about the two-family house, which he bought in April and is renovating down to the studs. “We determine what is going to be better for us. It is good people who make the neighborhood.”

As devastating as it has been for families who have lost their homes, the foreclosure epidemic has presented an unusual opportunity for a small but growing group of buyers previously priced out of Boston’s real estate market. Fernandes, for example, got his building for $271,500, just two years after the prior owner agreed to pay $540,000 for it.

Immigrants and other property pioneers have long been a force in reviving downtrodden neighborhoods. But their purchases of foreclosed and abandoned properties are particularly crucial now because these new homeowners are key to stabilizing neighborhoods racked by the mortgage crisis.

Government agencies and nonprofits are revving up rescue plans, but housing specialists say private buyers - new homeowners - are critical to reviving neighborhoods, because they have so much invested in their property.

“It is the quickest way to get this mess cleared up,” said Karl Case, an economics professor at Wellesley College and cofounder of the S&P Case-Shiller home price index. “You need people to buy the property and fix it up and move back. It’s the way the market works its wonders.”

Purchases of foreclosed homes in Boston jumped to 193 during the first six months of this year, from 37 during the same period last year, according to a real estate data provider, the Warren Group.

Statewide, there were 2,181 sales in the first half, nearly five times the number in the year-earlier period.

Warren Group analysts said the increase may be overstated because their data had not always tracked the sale of homes that lenders had seized from prior owners.

The upside of home foreclosure
by Jenifer B. McKim | Boston Herald