| American Dream Turns Into Foreclosure Nightmare for Some
Study looks at Poconos’ foreclosures August 9, 2004 By PATRICK CROWLEY
|
| In Pennsylvania’s Pocono Mountains, the hills are alive with the sound of foreclosures.An eight-month study by Pennsylvania officials found that between 1995 and 2003 more than 6,100 foreclosures were filed in Monroe County, a scenic and hilly region about 100 miles from New York City.
The number of foreclosures actually outpaced new housing construction in the community that in the last decade has attracted thousands of first-time homebuyers from New York’s urban neighborhoods, according to the report. “For some families in Monroe County,” Pennsylvania Secretary of Banking Bill Schenck said in a statement, “the American dream of owning a home, living in a safe and clean environment and sending their children to good schools, fell apart.” A task force of several Pennsylvania state agencies has been studying the high rate of foreclosures in the county. The state attorney general’s office has filed two lawsuits accusing 26 defendants — builders, developers, mortgage brokers and appraisers — of illegal and deceptive home sales, appraisals and lending practices. The lawsuits allege that the defendants participated “in schemes to entice and deceive mostly New York and New Jersey residents into buying and building homes in Monroe County at inflated prices,” according to a statement from Pennsylvania Attorney General Jerry Pappert. Pappert said his office is preparing a third lawsuit that names and additional 20 defendants. “The study clearly highlights some of the problems that are the basis of civil lawsuits and investigations conducted by my office into alleged abusive real estate sales and lending practices,” Pappert said in the statement. The Department of Banking study found that nearly 30 percent of the Monroe County foreclosure filings between 2000 and 2003 — a total of 2,745 filings — “represent homes that were likely or very likely to have been overpriced,” according to Pappert’s statement. Foreclosures in the county increased by 34 percent since 2000 and by 242 percent since 1995, the study found. According to the study, most of the foreclosures involved subprime loans, and the foreclosures typically went from loan origination to foreclosure in less than three years. To help homeowners, Fannie Mae said it will purchase up to $1 million of eligible mortgage loans for homeowners who may qualify for a new market-rate mortgage based on their credit rating prior to any foreclosure action that was the result of an “abusive loan,” the Department of Banking announced. The state has also established an Enhanced Mediation Program for mortgage companies to work with homeowners. Credit counseling and payment assistance is also being made available, officials announced. The Pennsylvania Builders Association cautioned in a statement that the “high foreclosure rates and concerns in the Pocono’s are truly a rare and isolated incident and do not comprise an accurate portrait of the home building industry and the value if offers.” The study “cast dark shadows over that area’s housing industry and the opportunities it has afforded thousands of people,” Scott Cannon, president of the builders association, said in the statement. “We … urge the state legislature and regulators to understand that consumers also need to be educated on the need to be responsible homeowners by paying mortgages on time and being credit-worth,” Cannon said. In June, MortgageDaily.com reported that a representative of the Appraisal Institute, which represents the nation’s appraisers, told a Congressional committee that the situation the Pocono’s is a clear indication that changes need to be made. “After reviewing the activities in the Pocono’s, and having witnessed other mortgage fraud schemes throughout the country, we are here to alert Congress that the licensing system it created for appraisers is broken, is not up to the requirements of the changing market demands in the 21st century, and needs to be fixed if we are going to avoid such situations in the future,” institute president Gary Taylor testified. Taylor told the committee that mortgage brokers regularly pressure appraisers, “a practice that has not been outlawed.” Related Inflated Pocono Loans, Appraisals May Cost Chase $10-20 mil |
