Edward Kruczinski and his family had a hard time finding a place to live since the mortgage on their Allenstown home was foreclosed on the day after Christmas in 2006.

While Kruczinski, his wife, Carolyn, and their three teenage daughters finally relocated to one side of a duplex in town, the foreclosure ruined their credit score, and it’s been an uphill battle since then, he said.

Kruczinski, 50, works for the state and has a second job at Wal-Mart. While his wife doesn’t work because of medical issues, he said, his income is more than enough to support a rent payment. Nonetheless, the family had a hard time finding a landlord who would look past their credit.

“To me it’s more important that people renting have an ability to pay, not something based on their past credit issues,” Kruczinski said.

As the number of foreclosures across the state – and the nation – continues to climb, there will likely be many more families facing the housing crunch as they compete with others who may earn the same income, but don’t have the black mark of a foreclosure on their credit records.

In Kruczinski’s case, rising property values due to new development in the area, an increase in their homeowner’s insurance and the skyrocketing cost of heating oil combined in a perfect storm.

“Basically, it became too expensive for us to live there,” Kruczinski said.

The crunch felt around the state – and the country

Most of the foreclosures across the state and the country evolved from high-interest subprime adjustable-rate mortgages, which boomed in the past few years and placed people into dream homes at unrealistic financing, according to Peter Hildreth, commissioner of the New Hampshire Banking Department.

“People go into the closings and all they see is the monthly payment they’re going to have next month,” Hildreth said. “People were buying houses that they really couldn’t afford.”

Now the effects of purchasing such homes are blanketing the country. According to RealtyTrac, publisher of the Registry Review, a weekly real estate and financial newspaper, more than 1 percent of homes in the nation were in some phase of foreclosure in 2007, double what was recorded for 2006.

The percentage of homes in New Hampshire entering foreclosure in 2007 is .67, or about one of every 150 loans, according to statistics from the national Mortgage Banker’s Association.

That’s creeping toward what the state’s rate was in the recession of the early 1990s, said Jane Law of the New Hampshire Housing and Finance Authority. For the entire country, that rate is .88 percent of all home loans.

The NHHFA’s Office of Planning and Policy conducted a study on foreclosures in December 2007 titled “Mortgage Delinquency, Foreclosures, and Subprime Lending in New Hampshire. How Big is the Problem?” which they updated in March with the most recent numbers from the last part of 2007.

Statistics from that study and RealtyTrac show the foreclosure wound deepening rapidly across the nation and the state in 2007, particularly in the fourth quarter. According to the study, there were 18,000 mortgage loans in the second quarter of 2007 with past due payments. Out of those, a total of 1,970 entered foreclosure in the fourth quarter, a 50 percent jump from the amount of homes entering foreclosure in the second quarter.

Out of about 32,650 subprime loans, almost 20 percent had a past due payment in the second quarter and about 3.5 percent of those had entered foreclosure in the fourth quarter, according to the study.

Subprime mortgages make up the larger portion of home loans entering foreclosure. In 1998, subprime mortgages made up only 2 percent of all mortgages. By 2007, that number had increased to 12 percent.

The state’s average foreclosures per month in 2005 hovered at around 40. In 2007, according to the study, that number jumped to 160 per month.

Contributing largely to the foreclosure troubles is the stagnant housing market, which prevented people from getting out from under mortgages that became too expensive, Law said.

“It was always an escape hatch for people when the market was going up,” Law said, adding the median home price went from $250,545 in October of 2007 to where it currently rests at $220,500. She added that the coming of spring will hopefully push that price back up.

Many of those who entered into subprime mortgage deals were middle class people looking to boost their lifestyle, the study found.

Hildreth said one of the trends his department saw with the subprime boom was the use of out-of-state mortgage companies and national banks rather than local banks and credit unions.

But Hildreth and Law both indicated that it’s not just a subprime mortgage problem anymore, a notion backed up by statistics from the national Mortgage Banker’s Association.

According to the statistics on delinquent payments, prime fixed mortgages with past due payments jumped about from about 2 percent of all loans of that type in the second quarter of 2007 to 4 percent by the fourth quarter.

The percentage of prime adjustable rate mortgages with past due payments jumped almost 3 percent in the same time period.

How local does it get?

Dave Mulchahey of Salem said his daughter’s home on Sylvan Road in Salem was foreclosed on after a series of financial hits, including her husband’s motorcycle accident.

At a public auction on Friday, April 4, at 3 p.m., the bank bought the home back for just under $200,000.

In Rockingham County, which includes Salem and Windham, RealtyTrac reports there were 108 foreclosures as of February 2008.

For 2007, the county had a total of 472, almost twice as many as the 240 foreclosures Realty- Trac reported for 2006.

The tax collectors for Salem not keep records of the number of foreclosure notices that come in or the actual foreclosures for the year.

Windham tax collector Ruth Robertson said while the town does not keep a count, it’s important to note that the town does not always receive all the notificaitons of foreclosures in town. Regardless, she said, the number coming in has risen in the past couple of years.

“The foreclosures have definitely increased,” she said.

Hillsborough County, which includes Pelham, showed a 54 percent increase in the number of foreclosures from 2006 to 2007.

According to RealtyTrac, Hillsborough County recorded 622 foreclosures for 2007 compared to 283 in 2006. Already, the county has had 144 foreclosures in January and February of 2008, just surpassing the half-way mark of the foreclosures RealtyTrac recorded for 2006.

Dorothy Marsden, Pelham’s town clerk, said the town only keeps a record of the foreclosure notices it receives. For all of 2007, the town received 33 notices of upcoming foreclosures.

“We’ve had 20 so far this year,” Marsden said, already more than two-thirds in a threemonth period of what the town got all of last year.

The number of foreclosures for Merrimack, Rockingham and Hillsborough counties combined in January of this year, 172 total, surpasses the number of foreclosures recorded for the entire state in January 2007, which was 157 according to RealtyTrac.

“It’s where people had to stretch to afford housing anyway,” Hildreth said of the troubling numbers for the three counties. “It’s still scary.”