News Column

Berks County foreclosures drop in 2013

February 26, 2014

By Karen L. Miller, Reading Eagle, Pa.



Feb. 26--Berks County finished 2013 with a total of 1,384 foreclosures, down 3.6 percent from 1,436 in 2012.

According to data supplied by the Berks County prothonotary's office, the filings for 2013 ranked the fourth-highest in number since 2008, when the subprime mortgage mess and rise in foreclosures hit Berks.

The fourth quarter of 2013 also saw a drop to 295 foreclosures, down from 354 in third quarter, 387 in the second quarter and 347 in the first quarter.

But the subprime mortgage crisis, propelled by poor documentation, a greater pool of unqualified mortgage applicants and a steep decline in home valuations, doesn't present the total picture in Berks.

All along, local experts have said the foreclosure problem in Berks was not about subprime mortgages as much as it was about the high unemployment rate.

"First, it is not surprising that foreclosures continued in 2013 on a pace that parallels prior years," said Thomas W. Beaver, an attorney who worked on the Berks County Bar Association's task force on foreclosures.

In 2012, the Berks County Residential Foreclosure Diversion Program was started by Berks courts with help from the bar association to help homeowners in danger of losing their properties.

Beaver further explained his opinion on last year's filings: "There are two reasons why: First, the employment picture in Berks County remains poor.

"Homeowners who lost jobs during the Great Recession either have found jobs that pay significantly less than they were previously earning, or haven't found work at all and have exhausted unemployment benefits.

"Both of these factors distort employment statistics, so that even if the current rate of unemployment in Berks County is 6.9 percent, according to the Pennsylvania Department of Labor and Industry, it doesn't reflect the actual compensation which workers are receiving, and which I suspect is still significantly depressed from pre-recession levels.

"Second, despite a well-publicized $25 billion national mortgage settlement, the major banks which were parties to that settlement do not seem to be taking its servicing requirement seriously."

Beaver said the diversion program recently increased its capacity for helping homeowners.

Peter Champagne, past president of the Reading Berks Association of Realtors and a real estate agent, said: "I guess I am just a glass-half-full kind of guy as I look at the big picture of these numbers.

"If you look at it a year at a time and not quarterly, 2013 was lower than 2012, 2010, and 2009. The anomaly here is the year 2011, and that low number was due to several large banks pulling back on their foreclosures due to accusations of their paperwork being deficient.

"Job loss and unexpected bills such as medical are the main reason for most foreclosures. Short of free medical care, there isn't much we can do about the second, but obviously if we can improve the economy and create jobs we can recover from the foreclosure situation."

Champagne cited a survey done by the Pennsylvania Association of Realtors in 2010 that found only 14 percent were subprime loans.

"This was contrary to what many believed to be the culprit, which was that a high percentage of these foreclosures were due to subprime loans," Champagne said.

Daren Blomquist, director of communications for RealtyTrac, which tracks Berks real estate, said: "We see the same pattern in our data, both at the county level as well as statewide in Pennsylvania.

"Statewide foreclosure starts in Pennsylvania were up 52 percent in the fourth quarter of 2013 compared to a year ago, although they were still down 17 percent from the third quarter of 2012.

"In New Jersey, foreclosure starts increased 31 percent from a year ago in the fourth quarter; in New York, foreclosure starts increased 6 percent from a year ago; in Connecticut, foreclosure starts increased 22 percent from a year ago.

"These states are all judicial foreclosure states that were more susceptible to delays, and many of these states had additional programs to help prevent foreclosures that also had the side effect of delaying foreclosures that would have happened anyway.

"These increases are showing us that not all the distress left over from the housing bust has been resolved yet."

He added that it takes longer to resolve issues in judicial foreclosure states like Pennsylvania.

Contact Business Editor Karen L. Miller: money@readingeagle.com.

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Source: Reading Eagle (PA)


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