Foreclosure Rate Drops in Northeast Pennsylvania

New statistics show 527 Luzerne County, Pa., property owners lost their homes and businesses in 2006 because they defaulted on their mortgages, according to the Times-Leader.

Another 758 faced foreclosure but managed to avoid it via postponements or cancellations, usually by taking steps to pay off the debt. It’s not much of an improvement from 2005, when 550 properties were lost out of 1,527 Pennsylvania mortgage foreclosure notices.

But the county still has reason to celebrate. The decline, though slight, goes against last week’s news about a national spike in foreclosure filings. Filings also went up statewide.

RealtyTrac released a study saying that more than 1.2 million foreclosures were filed nationwide in 2006, up 42 percent from the previous year.

The decline in foreclosures surprised Ryan Foy, who oversees the sales in the Luzerne County Sheriff’s Office because the county’s foreclosures grew in 2005. Continued decline seems possible in 2007 because only 250 new filings have been scheduled for Pennsylvania real estate transactions in February and April.

“That’s low,” Foy said.

Foy speculates that the county property buyers and mortgage lenders may be more conscious about the borrower’s ability to pay. He also believes many a mortgage lender may be paying more attention to the appraisals used to help determine how much money is loaned, so buyers can recoup enough to cover the loan amount if they sell.

There’s a lot of money at stake for lenders.

The amount of mortgage owed in the county’s 2005 filings was $95.9 million, and $81.9 million was overdue in the 2006 filings, Foy said.

But other less controllable factors also play into defaults, such as employment loss, illness and divorce, he said.

Real estate market gluts in less desirable areas have also prevented property owners from unloading buildings they can’t afford.

He believes a few two-property owners have landed in foreclosure in recent years because they took out a second mortgage loan on multiple properties to obtain cash and then defaulted.

National experts also attribute rising foreclosures in part to interest-only mortgages and variable-rate loans that caused some payments to balloon.

Though pleased that fewer people are losing their homes, Sheriff Barry Stankus said the number of foreclosures is still a concern. He estimates his office handled around 360 sales per year when he became sheriff in 2000.

He blames the economy and property owners’ difficulty juggling their mortgage payments with medication, heating bills, car payments, food and taxes.

Usually a home loan lender will reclaim ownership at foreclosure sales, which are commonly known as sheriff sales. However, Foy said more outside parties are also purchasing them to occupy or as an investment.

For example, 63 properties were purchased by parties not associated with home mortgage companies in 2006. In the study, Pennsylvania ranked 19th in states with the highest foreclosure rate increases from 2005 to 2006.

The state had 38,333 foreclosures in 2006, up 34 percent from 2005, according to RealtyTrac, which is a marketplace for foreclosure properties. Past reports showed that the state had a 14 percent increase in sheriff sales between 2000-2003.

The state Department of Banking has been trying to make Pennsylvania home loan lenders more aware of their responsibilities and has been lobbying for legislative reforms, said Dan Egan.

“I think the most important thing the department wants to get across to consumers is the importance of doing your homework and shopping around. Contact more than one lender or mortgage broker, compare offers and make sure you completely understand what it is you’re agreeing to when you sign the papers,” Egan said.