Foreclosures Remain Stable In Tri-County Area

January 30th, 2008

Tri-County area is holding ground even when the whole nation seems to be on a rising trend in home foreclosures. The statistics of new mortgages show stability for the past three years, with numbers ranging from 187 foreclosures in 2005, 210 in 2006 and 180 in 2007.

Moving on to Jefferson County, the figures show a slight increase from 75 to 79, which according to the protonotary include only those applications filed for foreclosures. It excludes complaints later converted to mortgage foreclosures. Elk County shows a decrease from 60 cases in 2006 to 55 in 2007. Armstrong County however, showed an increase from 202 in 2006 up to 220 in 2007. Clarion County has shown a steep fall with 32 cases, down from 58 foreclosures in 2006.

Mortgage applications are not processed in-house by most financial institutions in the area. According to Rob Jorgenson, senior Vice President with S&T Bank, customers can apply for a mortgage loan either in person at the branch office, or apply online or over the telephone. The customers are contacted only after their applications are regionally reviewed.

Those customers with a faulty credit history qualify for sub-prime lending, which carry higher interest rates than prime-lending rates as these sub-prime loans carry additional credit risk.

According to the U.S Department of Housing and Urban Development (HUD), home refinance loans pose a greater share of sub-prime lender’s originations as compared to originations of prime-lenders’.

Non-payment of home mortgages for several months results in foreclosures. The HUD web site states that the major reasons for defaulting are job loss, drop/cut in work hours, divorce/separation, retirement, illness and death of the family member/owner.

A recent Associated Press article reported that Citigroup Inc. incurred a $10 billion loss due to bad mortgages in the last quarter of 2007. The company also set aside $4 billion as cover for anticipated losses due to defaulters. This indicates that drooping house prices, increasing costs of food and energy and increased rate of unemployment are making regular payments difficult.

Once a foreclosure application is filed by an attorney, the county’s Sheriff’s office gets involved. Having allotted a civil number, the legal procedures start.

Lisa Martin, member of Elk County Sheriff’s office states that the exact number of foreclosure cases is hard to state and reasons are many for stalling the process - customers filing for bankruptcy, full payments made before sheriff’s sale and owners out of the state apparently not receiving their papers.

Elk County has seen a ten-fold increase in the number of cases in the past ten years and many of which were sold by or via the sheriff’s sale. More information about the “Sheriff Sale” can be found at the Elk County’s website - ww.co.elk.pa.us/sheriff.