Ann Davis of Danielson

ANN DAVIS, a resident of the Danielson section of Killingly, is one of many people in Connecticut facing foreclosure on her house. There were 6,500 foreclosures in the first four months of this year, 40 percent ahead of last year's pace. (ROSS TAYLOR / HARTFORD COURANT / June 13, 2008)

Shirley Reimann powers up her computer most mornings at the social services agency she supervises in Killingly and immediately runs a Google search: Windham County foreclosures.

What she sees has her worried.

The number of houses and condominiums for sale in Windham County as a result of foreclosure has climbed from five last winter, when Reimann first started tracking them, to more than 40, as of last week. Telephone calls to her office tell the same story: There were 14 from homeowners falling behind in their payments last month, up from "next to none" a year ago.

"We have a shortage of apartments, and rents are high," Reimann said. "Where are these people going to go?"

A town-by-town analysis by The Courant of 16 months of Connecticut home mortgage data through the end of April shows that Windham County is hardest hit, with 23 foreclosure-related filings for every 1,000 households, compared with 17 in the state as a whole.

Throughout the state, the numbers are rising - reaching 6,500 in the first four months of this year, or 40 percent ahead of last year's pace, according to The Warren Group, which tracks the housing market in New England.

But so far the state's foreclosures and home mortgage delinquencies have not led to the sort of crisis that has gripped California, Michigan, Florida and Nevada, the nexus of the country's mortgage troubles. In most Connecticut towns and cities, the incidence of homeowners losing their houses is scattered thinly across neighborhoods.

Still, the state's foreclosures and distress sales are tamping down the value of houses not just in eastern Connecticut but throughout the state, especially in the bigger cities and lower-income towns. A Warren Group report showed the statewide decline in median sale prices reaching 9.8 percent for the year ending in April.

And economists warn that if recession hits Connecticut harder than expected, the foreclosure problem could deepen fast. Job losses, so far relatively mild, could pick up momentum and strain household budgets already under pressure from rising gas, home heating oil and food prices.

"We're holding up OK so far," said Donald L. Klepper-Smith, an economist at DataCore Partners Inc. in New Haven. "But I think there is a risk of increased foreclosure because of energy prices."

Reimann, whose nonprofit Access Community Action Agency provides social services throughout eastern Connecticut, shares those concerns. Today, 150 gallons of home heating oil costs $682, but Access can only provide $675 for an entire season of energy assistance to the neediest families, she said.

"These are the choices they have to make: heating their home or paying the mortgage," Reimann said.


Northeastern Connecticut has long struggled with the loss of manufacturing and defense jobs. It has also been hurt by its dependence on employment in nearby Rhode Island, where the housing and economic downturn is the deepest of the six-state New England region.

Although service sector jobs at the casinos and in new, mega-shopping centers are replacing some employment from traditional industries, they cannot match the hourly wages.

Just a short walk down Broad Street from Reimann's office in Killingly, there have been four homes with foreclosure-related filings since the year began. It's easy to pick out two of the properties; both are Victorians with wide front porches. Front lawns are overgrown. At one there is mail spilling out of the mailbox, a sign the house was recently abandoned.

Neighbors on the street worry about the blight on their neighborhood, once a grand thoroughfare, now characterized as a neighborhood in decline. They worry the decay will pull down their property values.

"I've been here 28 years," said Don Costello, who owns a funeral home in town. "Of course I'm concerned. This used to be one of the nicest streets in town."

Studies have shown that once a property goes into foreclosure it immediately lowers the value of surrounding properties by $5,000.