By Chris Lovett
Special to the Reporter

If there's a bottom in Boston's housing slump, it's around Hendry Street in the Meeting House Hill neighborhood. Sandra Smith has lived there for three years. That's all it took for a fully occupied street of wood frame houses to become a gallery of plywood.

"It looks like a ghost town," she said.

On one side of Hendry was a pair of boarded-up three-deckers. One of them was declared unfit for habitation. The weeds growing out front were more than four feet tall.

"It's like the area's just empty," Smith said. "I see people coming through get kind of scared, because they see so many empty houses. It makes the street look deserted. It's hard to get a cab down here."

On the other side of Hendry was another vacant three-decker, plus a house around the corner on Coleman Street that was being taken by the city for back taxes. One block away, around the corner of Clarkson Street, were two more abandoned houses facing each other.

The next house on Clarkson Street, at the corner of Trent Street, was another vacant three-decker. There were noises inside from a work crew. A man wearing a dust mask and soiled jeans explained they were trying to make the building safe enough to for prospective buyers to go inside and look around. Vacant buildings also have to be secured to keep out squatters and criminal activity, and to prevent fires.

"It's turning into long-term maintenance," he said. "They're not moving, because there's so many of them."

Foreclosed properties can be found even in more affluent parts of the city, such as West Roxbury, Charlestown, and South Boston. But some neighborhoods see more foreclosures than others, and some kinds of housing are more difficult to resell.

Adding to the inventory are transactions that drive up the price of a property - on paper- before resulting in foreclosure petitions in a matter of months. Examples around Hendry belie the common foreclosure scenario of the owner-occupant overwhelmed by a jump in interest payments.

According to the city's Department of Neighborhood Development (DND), the number of foreclosure actions in Boston through Sept. 14 of this year is 1476. The number for all of last year was 1585. A spokesperson for DND, Kerry O'Brien, said 70 percent of Boston's foreclosure petitions in 2006 were in four areas: Dorchester, Roxbury, Mattapan, and Hyde Park.

The collapse of the sub-prime mortgage market has led to more rigorous standards for lending. That means fewer buyers who can qualify to buy property. But the executive director of the Massachusetts Affordable Housing Alliance (MAHA), Thomas Callahan, says more people are also signing up for classes to position themselves for loans from other sources.

"It might have a long-term benefit," he says, "because of driving people to non-profits more."

MAHA reports a low default rate in its affordable mortgage program, as does another provider, the Neighborhood Assistance Corporation of America (NACA). Homebuyers can get loans from NACA with no down-payment, but they have to be owner-occupants. Callahan says commercial banks are also offering "very affordable" mortgage products that should be more aggressively marketed.

"There's less entities offering credit at this point," he says. "But, if you're in need of financing, it's possible."

Other observers say it takes more than a good mortgage product to turn around many of the houses undergoing foreclosure in areas such as Dorchester. One of them is David Kroc, owner of Landmark Real Estate Services. He's a broker specializing in "distressed properties," and his inventory includes a foreclosed three-decker in Dorchester at the corner of Kingsdale and Wales streets.

"Most of these properties were at the end of their useful life when they were sold," said Kroc, "and the people who bought them didn't understand that." As a result, observers say, foreclosed three-deckers are going on the market in need of repairs costing almost $200,000. Add that to the cost of acquisition added to the price might very well be above current value in a declining market.

"If it's a distressed property," Kroc says, "chances are it's only going to appeal to an investor."

A real estate analyst based in Dorchester, John Anderson, says, "It means that it's going to be very, very hard to acquire, and it's going to be acquired by people with deep pockets."

Kroc predicts another year with a high rate of foreclosures. Anderson says, at least in some parts of Boston, the market will "get worse before it gets better."

Even by comparison with conditions just a few blocks away, the market around Hendry looks abnormally bad. In the adjacent areas, vacant units are hard to find, and there's housing under construction on Hamilton and Richfield Streets.

A little more than a year ago, some people selling property around Hendry appeared to be making money.

A family trust that owned several properties in the neighborhood made two sales in June of 2006 to Cheryl Dorsey - a three-decker at 22 Hendry and another house around the corner at 2 Clarkson. The first sold for $446,500 and the second for $365,000. On both properties, Dorsey received 100 percent financing. And on both properties the lender filed to foreclose in August, 2007.

Last October, the same trust also sold Dorsey the three-decker at 8 Clarkson. Though it's estimated the house currently needs at least $175,000 in repairs, it sold last year for $450,000, and Dorsey got a mortgage for $405,000. By early July of this year, the lender had filed to foreclose.

The pair of three-deckers at 19 and 21 Hendry also appeared to be money-makers. Number 19 was purchased in June, 2005 for $550,000. On a single day in March 2006, each apartment sold as a condominium for exactly the same price, for a total of $897,000. Records show different buyers for each unit, but each one took out a mortgage for the same amount &endash; $269,100. By February of this year, lenders had filed to foreclose on all three units. Even if the buyers never really made down payments, the seller still would have grossed $807,300.

The same seller bought 21 Hendry in July 2005, also for $550,000, with 100 percent financing. Again, in September 2006, each unit sold for the same price - $299,00 - but this time to a single buyer. The buyer mortgaged two units for $269,100, and the other for $267,300. By April of this year, lenders filed to foreclose on two of the units.

Anderson says recovery will be more difficult in areas with a high concentration of properties whose values rose sharply before the sub-prime mortgage market collapsed.

"The lack of these bad loans is bringing down prices," he said, "and the market's being flooded with foreclosures."

But Kroc says it's only a matter of time before lenders taking over properties will settle for what they can get, as long as there's a "perception of value."

"There's always going to be a price," said Kroc, "no matter how bad the market is, where somebody will buy it."