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Nazareth, Pa., United States

Friday, May 09, 2008

Lehigh and Northampton County Offer Nothing to Those Hit by Home Mortgage Crisis

In Northampton County's new, $46 million, castle, life is good if you wear a black dress. A friend took the grand tour recently, and told me, "It really is a palace. They even have a dishwasher!" In addition to a courthouse renovation that went millions over budget, the boys and girls in black now want a new judge appointed so they can work even less. Of course, one judge means thirty new county positions, but that's our problem. We servants can figure out a way to pay for it, as jurists scoot in and out of the building through "private" entrances that insulate them from the public they supposedly serve. Northampton County judges have grown isolated. It's little wonder they do nothing to look out for people hit hard by the home mortgage crisis.

In Philly, it's a little different. Judges have actually tried to help. Foreclosure proceedings are overseen by the courts. In April, ALL sheriff's sales were suspended. When they resumed in July, a conciliation process between bank and borrower was added for owner-occupied properties.

In Northampton County, no one except harried county workers pays much attention to the rising foreclosure rate.There's a sheriff's sale today. That's the only way homes get sold at all these days.

Why is Lehigh and Northampton County doing nothing to help homeowners in crisis? If they're waiting for the feds or state, they'll be waiting forever.

27 comments:

gsbrace said...

Are they allowed to do anything? The Philly actions, I believe, were taken under its status as a city of the first class. Many actions that philly takes are under that classification.

I guess the counties should implement those actions which Philly has taken and let somebody challenge whether or not they have the power to actually do it.

Bernie O'Hare said...

"Are they allowed to do anything?"

Absolutely. Judges supervise foreclsoure proceedings. Each county has the right to adopt local rules that regulate how these proceedings occur. In Northampton County, PJ Freedberg issues edicts all the time. Instead of handing down an order demanding searches for everyone who comes within a mile of the courthouse, he could adopt a local rule requiring mediation for owner-occupied properties and actually help someone.

michael molovinsky said...

great idea, philly courts and judges created a malpractice dilemma in Pa. which caused a doctor drain because of malpractice insurance rates. now they will create a mortgage red line; why should banks issue mortgages if their recourses are court impeded?

gsbrace said...

so this can be resolved by using legal decisions? It doesn't require an act of commissioners/council? I'm trying to get my head around the public policy needs here.

MM, banks already lose money off of foreclosures since they never will recover the full cost of the mortgage. It is in their interests to have some kind of mediation that leads to a greater likelihood of recovery. At think that is what Bernie is talking about.

Bernie O'Hare said...

Banks make no money by foreclosing on mortgages. Banks do make money if people can stay in their homes. This additional procedure would ensure that all alternatives are exhausted before people are thrown out of their homes. In 2003, Philly started making changes in its foreclosure process. The rates there have gone down while going up everywhere else.

As far as bringing malpractice into this, you're just being illogical.

Bernie O'Hare said...

so this can be resolved by using legal decisions? It doesn't require an act of commissioners/council?

This is resolved by adopting a local court rule concerning foreclosure proceedings. No act from commissioners or council is needed. In Philly, a resolution was adopted, but it was nonbinding. This is the court's domain.

Anonymous said...

Aside from the issue of people who either were unprepared for home ownership, and/or are unwilling to accept responsibility for their poor decisions, it's simply bad policy for our government to "insure" that which is already known to be lost.

It will only serve to discredit current, legitimate (i.e. before bad things happen) government insurance programs for which many have fought. Bankers will have their interests protected and lesser qualified potential home owners will find greater difficulty getting mortgages.

These programs are historically poorly considered going back to HUD in the 60s, and undermine systems that protect the 95% of the rest of us who continue to responsibly pay our mortgages on time.

Populist impulses in election years do not make for sound public policy.

Chris Miller said...

Anonymous 11.27 Am
Thank you. People made foolish decisions. On top of that our wonderful folks in government put the pressure on the banks to lend to more people. The banks come up with subprime. Bing bang its all over. Who deserves the spanking here?
We need to go back to the policies put into place by Paul Volker in the Reagen years. It hurt for a bit but we came out the other end better for it.

Bernie O'Hare said...

Chris & Anon 11:27,

I understand the laissex-faire argument. In some cases, you are right. In others, you have been wrong. It is that type of thinking that allowed the Irish to starve while the English had the means to prevent it.

Let's look at what has happened. You want people to accept responsibility for their poor decisions, but how poor were they?

1) Mortgage brokers have been unregulated in Pa., and Chris Miller, you can personally attest that many of them have been predatory bandits. I have heard many a tale of the obscene fees they charged and the many false promises made. So ordinary people who have nothing to do with the real estate industry are supposed to konw that?

2) Appraisers and mortgage brokers were clearly inflating property values so that mortgaes would be granted. An ordinary person is supposed to be responsible for that?

3) Government has deregulated and refused to regulate, screwing the consumer in the process. Banks can merge with title companies so that no one really looks out for the borrower, who is actively encouraged NOT to seek the advice of an attorney. As I said, mortgage brokers were not even regulated.

3) Many lenders have engaged in predatory practices, from the constant solicitations to ridiculously structured mortgages with adjustable rates that people simply lack the income to pay.

The program in Philly has actually helped people stay in their homes and has helped lenders get their money.

This helps people, and that's why government exists. Or is it there to protect the wealthy?

gsbrace said...

I don't think Bernie is talking about programs. I think he is talking about better mediation for the foreclosure process. Right now the foreclosure process gives the banks only what the sale can get (often WAY under FMV) and the person gets killed on the credit report. If better court mediation is used, the bank can possibly recover more of their losses and the person has a better chance to meet that obligation.

I don't think he's talking about insurance or other big government approaches. Maybe I'm not reading his commentary accurately.

Bernie O'Hare said...

Geoff, You understand me correctly, and I'm sorry if I was unclear to Chris or the Anon. What Philly does is simply add a step in the procedural process of a foreclosure, and only for homes that are owner-occupied. It requires a sitdown between lender and borrower, refereed by a mediator, to see if something can be worked out that will keep the borrower in his home while enabling the lender to get its full return. I don't think it will even slow down the process of an actual foreclosure.

Anonymous said...

"It is that type of thinking that allowed the Irish to starve while the English had the means to prevent it."

God bless your flair for hyperbolic imperative, Bernie. You're one of the best. Having read The Great Hunger at the behest of my grandparents from Limerick, I think your comparison is a bit overdone and borders on insulting. The Irish did not have the same choices available to them and were in no way responsible for their predicament.

The remainder of your analysis is spot on, however, and seems to make my point that bankers always benefit from cockamamie funding schemes and the schemes that follow to fix the previous one. They count on right-wingers for the first and left wingers for the second - but either way, they win.

michael molovinsky said...

bernie, how could it not slowdown the process? your posting clearly states the judges are inserting an extra process which always requires more time. the banks foreclosed as a measure of last resort. this process will allow the non-paying home owner extra time in the house, at a greater loss to the bank. this last decade had a great experiment to see if making homeowners out of the under-qualified would improve civility in the cities, it didn't. bernie, i'm illogical to talk about the malpractice fiasco, but you can refer back to the potato famine?

michael molovinsky said...

bernie, you write;

'This additional procedure would ensure that all alternatives are exhausted before people are thrown out of their homes'

there are no alternatives that do not cost future, and better, homebuyers more money. you apparently believe home ownership is now another entitlement

Bernie O'Hare said...

The Irish did not have the same choices available to them and were in no way responsible for their predicament.

Just as the Irish can't be blamed for failed potato crops (although they were), homeowners can't be blamed for listening to mortgage brokers, predatory lenders and appraisers (although they are).

Bernie O'Hare said...

bernie, how could it not slowdown the process? your posting clearly states the judges are inserting an extra process which always requires more time.

Once a foreclosure is filed and srved, twenty days must elapse before a lender files a notice of intent to file default judgement. Ten days after that, it may enter judgment and execute. But beofer it sells the property, it must be advertised for a period in advance of the sale. No sale can occur until all these steps are completed. From the time a complaint is filed to sale, you're talking around three months minimum.

A mediation requirement could be something that could occur between the filing of the complaint and sale. It could, but does not have to, slow anything down. There are already Act 91 requirements and they slow nothing down, either.

i'm illogical to talk about the malpractice fiasco, but you can refer back to the potato famine?

Yes, because the malpractice fiasco, as you call it, has nothing to do with the laissey faire philosophy that per,mits the wealthy to take advantage of the poor. The potato famine is a glaring example of the failure of that philosophy, although at least one commenter thinks I'm nutz for bringing it up.

you apparently believe home ownership is now another entitlement

Nope. But I believe government exists to protect the weak from the more powerful. Losing a home is a pretty sad affair for mst people. Nobody wins. Since the feds and staties are sitting on their hands for the most part, the locals should do what they can. Since 2003, the foreclosure rate has dropped in Philly, a remarkable achievment. Why does no one try to emulate that?

Anonymous said...

1st off, I agree w/ the theme that crooked mortgage brokers played a large part in the problem we have today. What also played a problem (not so much in this market as the south and western US) was speculators buying properties with the intent of flipping them in 3-6 months - after all, real estate values always go up 40% per year, don't they? (for those who don't know, that's a joke)

However, we need to remember something - a very large number of subprime mortgages for property purchases done in the past 5 years were done with very little or no money down from the buyer. If the buyer has no money into the deal, they are not impacted in the same fashion as someone who put 20% down and got screwed by a crooked broker. We have to be careful that, if we decide to do anything, we take true economic harm into the equation, and not assume that all foreclosures are equally damaging. They're not.

We cannot reward the speculators and the people with no cash in the game. That's not fair to the rest of us who ultimately are going to have to pay for this. Remember as well, nothing Washington (or any other governmental agency) does comes without a cost to the taxpayers.

Anonymous said...

I agree with Mike Molvinsky on some points. Shouldn't home ownership be something you earn, not another government entitlement?
Screw the speculators, why should those of us busting our asses everyday to pay our own mortgage bail out idiots unneccessary risks? You play, you lose, too bad.
If anything, Government examiners should be barring any of those involved in these shady mortgages from having anything to do with real estate. They knew what they were doing, especially selling homes to people who had no business buying them.
The American dream is something you strive to earn through your own efforts, not government handouts.

Anonymous said...

While we are at it, why doesn't the government just pass out all the gas it can buy to evertyone, and put it on our tax bill? yeah that's agreat idea! When you give it away, it loses value, and is treated with disregard.

Anonymous said...

Remember the time test adage, let the buyer beware? The government should rescue us from natural disasters not ones of our own creations. Greed is the underlying cause of this “crisis” not any force of nature.

Scott Armstrong

Bernie O'Hare said...

Damn, you conservatives are tough. You should play the heavies in some Dicken's novel! Where's the love?

Anonymous said...

Bernie,

Do you have children of your own? If so you may understand the value of instilling discipline and self reliance in them. That’s love!

Scott Armstrong

gsbrace said...

Bernie has a daughter who is in Iraq. I think he gets love and discipline.

I think the court rule does just that. It is one final attempt to find a way for discipline (in this case personal budgeting and an agreement on timelien) to be used to solve a problem that may or may not have been the product of a more powerful person taking advantage of a less powerful person. In a process that already takes months, it appears there are windows that already exist to use this tactic.

Very rarely will I cite Philadelphia as a model of governing excellence (though their parking authority operates with the utmost efficiency), but I think they have found something on this one. There is no big government programming, just the requirement that both parties sit down one final time to see if there are any last ditch attempts to honor a contract.

Anonymous said...

When someone is having trouble paying the entire mortgage payment I do not see why a bank or mortgage company cannot accept the intrest payment and whatever the home owner can pay towards the principal till the homeowner can pay more or refinace or whatever. That way everyone will benefit and its still up to the home owner to pay. The entire problem here is bank and mortgage company greed. Most mortgages for local homes are very soon sold to out of state speculators who could care less about Northampton and Lehigh County. hence forclosures. Thanks Henry Schaadt

Anonymous said...

gsbrace,

The point of my post was to make the point that government’s role is not to fix problems of our own creation. If you think otherwise you are very likely a Democrat. It is not a criticism but merely a philosophical difference of opinion.

Scott Armstrong

gsbrace said...

One of the many roles of the judiciary is to make sure contracts (entered freely and willingly) are honored by both parties, something that this mediation would do. But congratulations in turning this into a partisan issue. The value of a legitimate contract is an American value, not a partisan one.

Anonymous said...

gsbrace,

You make my point, it is still merely a difference of philosophy no matter which branch of the government is involved.

Scott Armstrong