Foreclosures continue to rise in Pennsylvania

Time magazine recently reported on a shortage of attorneys to manage the avalanche of foreclosures across the country. Rising foreclosure rates continue to add inventory to the real estate market. High unemployment rates and Option-ARM mortgages ready to reset are expected to send foreclosure rates soaring.

Dr. Austin Jaffe, PAR’s consulting economist from the Smeal College of Business at Penn State University, said, “Pennsylvania was slow to show high rates of foreclosure but they are now becoming more prevalent than before. Still, foreclosures in PA have not reached the levels in most other states.”

While Pennsylvania is ranked 34 in number of foreclosures in the country, the foreclosure rate in the commonwealth is up 15 percent from the third quarter of 2008 to the same period this year, according to RealtyTrac.

“Even in states that haven’t been hard hit the foreclosure rates are still higher,” said Sylvia Alayon, vice president of operations for the Consumer Mortgage Audit Center (CMAC). CMAC specializes in forensic mortgage due diligence services and litigation support services and works with attorneys to help homeowners rectify mortgages with violations or modify mortgages with ARM payments.

“What’s occurring in the mortgage market has never occurred before so there are no systems in place,” Alayon said. “Everyone is overloaded – the lenders, courts and attorneys. In some areas you can see carts of foreclosure files being wheeled into the courtroom.”

As real estate markets struggle to deal with the rising foreclosure rates, lenders continue to look for ways to help homeowners facing foreclosure. Many believe loan modification is crucial to stabilizing the marketplace.

Alayon is one of them. “Loan modification is the key. It’ll stop the bleeding and help people stay in their houses and continue to make payments,” she said.

Jaffe said loan modification is a somewhat controversial idea that has been slow to be implemented. “The evidence is limited in showing how successful loan modification is,” he added. “It’s important to try to help people but only eight percent of those who apply actually qualify and of those who quality, about 50 percent default later.”

“Even the experts are tossing coins at this point as to when the foreclosures will stop,” Alayon said. “We may see the tide turn in the next three years but until all the factors, unemployment and excess inventory are changed, the market cannot stabilize. That’s why loan modifications are so important.”

Sylvia Alayon, vice president of operations for the Consumer Mortgage Audit Center, says consumers facing foreclosure should:

• Seek the advice from a real estate foreclosure attorney. Remember to take closing documents from settlement.
• Consult the Neighborhood Assistance Corporation of America (NACA) advocacy group to garner advice on helping to modify the mortgage.

Consumers can represent themselves in court but they need to do extensive research.