Rather than the usual partisan bickering, the tenor of the meeting was aimed at finding out what county government can do to help homeowners suffering from the foreclosure crisis. At the start of the meeting, McClure gave a well-researched opening statement, explaining both the problem and a possible answer.
He agreed to provide a copy of his remarks to me, and I want to share them with you. No matter how you feel about the notion of a conciliation conference between borrower and lender, McClure paints a startling, and factually based, picture of our home mortgage crisis.
The middle class is being crushed. Retirement savings are being battered by a tremendously volatile stock market. Nest eggs are being tapped to meet day-to-day obligations. As has been true for most of our modern history, the largest part of any particular middle-class family’s wealth has been the appreciation of the value of their homes over time. While we expect that economic phenomenon to continue in the future, right now, this very day the value of middle class homes are fighting a downward pressure. The mortgage foreclosure crisis is, and will continue to, if not abated, pressure all of us. And this is why all middle class folks should care about this crisis, when your neighbor’s home is foreclosed upon it can have a negative impact on the value of your home. We can find answers. And, we can find answers without imposing additional burdens on our real estate tax payers.
In June of this year, we learned that "a record 9 percent of American homeowners with a mortgage were either behind on their payments or in foreclosure . . . " A real estate analyst with the firm Weiss Research was quoted at that time saying, "The problem that policymakers and Wall Street once assured us was ‘contained’ to subprime mortgages has proven to be anything but." According to the Labor Department, "a drop in income" - whether through a lost job, divorce, death of a spouse, or health problems - is the No. 1 reason people fall behind on their mortgages and lose their homes. (Source Associated Press). Let me repeat that a "drop in income" is the number one reason people are falling behind on their mortgages. These are hardworking middle class folks that need our help. And, as we are all aware, the unemployment rate is rising.
It has recently been reported, that in the month of October alone 84,000 homeowners across the United States have moved into the foreclosure process. That is a 25% increase in one month. 279,500 U.S. homeowners received at least one foreclosure notice this year. Frankly, it is astonishing that one in every 452 homeowners nationwide is touched by foreclosure. (Associated Press 11/13/08).
We have also recently learned that Freddie and Fannie Mac are working on a national program to help distressed homeowners facing foreclosure, however, Freddie and Fannie only own 20% of the delinquent mortgages nationwide. Said Sheila Bailer, Chairperson of the Federal Deposit Insurance Corporation: "the plan falls short of what is needed to achieve wide-scale modification of distressed mortgages." (Associated Press 11/11/08).
We also learned in July of this year that "the number of Pennsylvania homeowners who fell behind on their mortgage payments in June surged by nearly 80% over the June 2007 number." According to the Associated Press "a total of 4060 Pennsylvania homes received at least one foreclosure related filing" in June of this year. That was a 26% increase in filings over of the previous month." (Associated Press; Lancaster On-line 7/16/08.)
Lest we think this isn’t a problem for county governments; a National Association of Counties survey of large urban counties, 96 percent of them, "saw an increase in mortgage foreclosures during the past year." The survey also found that 52% of responding county officials said they’re experiencing revenue shortfalls, either as a result of foreclosures or declining housing values." (County News )
Here at home the news is not encouraging. Statistics provided to me by Sheriff Jeffery Hawbecker and Prothonotary Holly Ruggiero indicate that in 2003 there were 578 mortgage foreclosure filings. The number decreased to 535 the following year and came up slightly in 2005 to 567. In 2006, that number spiked to 711, and in 2007, that number jumped to 874 mortgage foreclosure filings. As of September 30 of this year, there have already been another 874 mortgage foreclosure actions filed. Let’s hope, that here at home these numbers begin to plateau and subside, but if they don’t what do we do?
My own review of the law indicates that in this matter County Council has no authority. The County Executive has little or no authority. Ultimately, the responsibility for addressing this matter falls to our County Court. And ladies and gentleman; this is a good thing. My professional experience is that we are fortunate to have a learned and compassionate judiciary in Northampton County. Our Court has a deep understanding of the law of foreclosure, and it has been my personal observation that it has a deep desire to see wrongs righted and justice done. That isn’t to say that I don’t have my own ideas about the various models and which of them may work best for us.
Before ascending to the bench our former Solicitor, the Hon. Leonard N. Zito, faxed me an article that he had read in the Pennsylvania Law Weekly. The article discusses several counties that are in various stages of dealing with this crisis using various court crafted measures. Some of the counties described in the article such as Philadelphia and Allegheny are very large. Others cited are similarly situated to us - they being Lackawanna and Blair counties. Although, I believe we are going to be presented with information regarding the Philadelphia program, it is my view that the Allegheny County model may be a better fit for us. In the Allegheny model, a separate mortgage foreclosure docket is being created for owner occupied mortgage foreclosure actions. President Judge James of Allegheny County was quoted as saying that, "he hopes the new program will intervene early in foreclosure actions-before judgments are entered and attorneys fees20and other costs are added - in order to make refinancing of loans more feasible." Under the Allegheny plan, "foreclosure defendants with already pending actions seeking continuances or the postponement of sheriff’s sales must have a face-to-face meeting with a housing counselor in order to get a continuance." Additionally, foreclosure defendants will receive counseling under the Pennsylvania Housing Finance Agency. As Allegheny county has less mortgage foreclosure filings than Philadelphia, the President Judge expects to have a judge hear conciliation conferences two or three days a month instead of having to involve masters. The Bar Association is going to provide pro bono representation to defendants who need counsel. (Pennsylvania Law Weekly 8/18/08). It is my view that following the Allegheny County model, as opposed to the Philadelphia model, will not require us to burden our taxpayers with any additional public employees at a time when we are under severe fiscal restraints.
We are very fortunate to have several public officials with us here today as well as leaders from across the Lehigh Valley to lend their expertise to us with respect to this crisis. I look forward to hearing from them about their ideas to deal with this most pressing issue.