Foreclosure Prevention Planning in Pittsburgh
by admin ~ October 17th, 2008.Judges, lawyers, social services advocates and mortgage bank representatives are working to create a regional program that will offer free legal services and counseling to homeowners facing foreclosure, allowing them to cut a deal with lenders and remain in their home. The program was outlined Friday before Sen. Arlen Specter and Sen. Bob Casey at a special hearing of the Senate Judiciary Committee that was held in a Pittsburgh courtroom. Foreclosure prevention is based on a similar program that began in Philadelphia in June. Casey said about 80 percent of homeowners who went through the Philadelphia program managed to put off foreclosure and remain in their homes.
Allegheny County President Judge Joseph James said officials are resolving the final issues, including funding, and hope to have the program up and running in the Pittsburgh area within weeks. “It’s a win-win situation if we can structure these matters so that the homeowner can remain in his home,” Specter said, noting that banks often pay enormous fees to evict people and lose value on the foreclosed home. Cities nationwide have taken steps to try to counsel homeowners and decrease foreclosures. Most of the programs, however, are not as proactive as Philadelphia’s, which Casey said should be implemented nationally. Under the Philadelphia program, people whose homes are destined for sherriff’s sale are issued a court order. When they arrive in a courtroom, loan counselors, attorneys and bank officials try to help them work out a solution to forestall foreclosure.
Judge Annette Rizzo, who runs the Philadelphia program, said 30 percent of homeowners ignore the court order. But, among those who show up, many either delay foreclosure or get an outright settlement, such as loan modification or a lump sum catch-up payment, she said. The program in Pittsburgh, like Philadelphia’s, would offer free legal services and counseling. Unlike Philadelphia’s, it wouldn’t order every person whose house is up for sheriff’s sale to enter negotiations. Instead, people who operate through the program will have their foreclosure proceedings halted for three months, giving them time to negotiate new mortgage conditions with their lender, James said. If necessary, the court could extend that period to provide the sides with more time to cut a deal. Homeowners would dial a toll-free number to access services like loan modifications and including experts who will help sift through the enormous, and often confusing, pile of mortgage papers, James said.
Nationally, more than 3 million homeowners are behind on their mortgages and more than a half-million foreclosed homes are on the market. Casey noted foreclosures in Pennsylvania increased by 60 percent in August compared to August 2007. But Allegheny County – home to Pittsburgh – has seen the number of foreclosures decrease slightly since 2006 from 4,727 to 4,450 this year, according to Sheriff William Mullen. Dan Sullivan, a mortgage foreclosure prevention specialist with ACTION-Housing Inc., a social services advocacy group, said the rise in Allegheny County’s unemployment rate from 4 percent a year ago to an estimated 6 percent this year indicates there could be a rise in defaults among thousands of people who have variable-rate mortgages. “I don’t think we’re out of the woods. I think we just got to the beginning of the woods and we’re going to see our foreclosure rates go up,” Sullivan said. Article written by By RAMIT PLUSHNICK-MASTI
Category: Foreclosure news | Tags: foreclosure, loan modification