As more discerning readers of this blog already know, I've been highly critical of Northampton County Council member Lamont McClure. Some council members, like Ron Angle, are workhorses. Other council members, like Ron Angle again, are show horses. McClure has usually been a "no show" horse, missing important budget hearings and only rarely attending committee meetings. But McClure impressed the hell out of me yesterday, when his Legal and Judicial committee met to review our mortgage foreclosure crisis and its impact on Northampton County residents. He was both well-prepared and invited knowledgeable and interesting speakers. It was local government at its finest.McClure, in a meeting attended by Council members Ron Angle and Peg Ferraro, started things off with a well-researched statement detailing the home mortgage crisis and its impact on the Lehigh Valley. Nationwide, he notes that one in every 452 households are touched by foreclosures. There was a twenty-five per cent increase in October alone.
Locally, there has been a dramatic increase in foreclosures. In 2003, there were 578 foreclosures. Last year, there were 874. This year, Civil Division Clerk Holly Ruggiero and Sheriff Jeff Hawbecker told the committee that 960 actions had already been filed by the end of October. We will break 1,000 this year.
McClure told the committee that foreclosure conciliation programs are already underway in Philly, Allegheny, Blair and Lackawanna Counties. These programs are designed to divert owner-occupied properties into mediation, usually before a judgment has been entered. He noted an excellent article describing these programs in Pa. Law Weekly.
According to court administrator Jim Onembo, Northampton County's judges are considering a mediation program here. They have some concerns, and Onembo expressed them. "What about a father who gives his Son a mortgage? Or a lender from Nevada? Must they attend a conciliation conference?" Despite this problem, Attorney Chris Reed, who has been studying different programs, claims the court is "very receptive" to some form of foreclosure conciliation.
Alan Jennings, CACLV's Executive Director, told the committee this crisis extends beyond the parties directly affected. "This is everybody's problem. Every one of us who owns a home is going to see property devalued more than it already is."
Angle and Jennings, frequent sparring partners in the past, were on the same page. Angle will support some form of conciliation process so long as it does not interfere with the contractual relationship between borrower and lender. Like Jennings, Ron would prefer this mediation to occur early in the foreclosure process, before large sums of money are spent for attorney fees and to advertise sheriff sales.
Representing the Lehigh Valley Realtors Ass'n, Mark Molchany told McClure the Lehigh Valley has one of the lowest foreclosure rates in the country. "Our market is strong. Overall, nationally, we're ahead of the curve." But Jennings contradicted Molchany, noting that in 2004 and 2005, both Lehigh and Northampton Counties were among the top ten counties in the state for foreclosures on subprime mortgages.
23 comments:
Although I agree that the Rules of Civil Procedure for Execution of Judgments needs an overhaul, I disagree that it should come from the local level. County Council and President Judge McFadden should not amend the local rules. It would create a disparity of rights across the Commonwealth. Change should come from AOPC and the Supreme Court of PA. This is a noble cause, just wrong tactic to get a justifiable end.
I only know one religion that prays at the altar of the AOPC.
I agree with Anonymous 7:06, but to wait for State and federal bankruptcy laws to catch up to allow judges to mediate a bankruptcy would take too long! It’s the right move to stem the tide ASAP!
With one of the lowest foreclosure rates in the country, this initiative is unnecessary. It looks great politically. It bails out the irresponsible and steals an opportunity from first time buyers who have traditionally benefited in these cycles.
Legislation like this protects big lenders and postpones the tough medicine that's required to get off the mat. This is not the Great Depression with 50% foreclosures. The national figure is currently around 5%. The LV is lower than that.
Let's fix real problems that fall within the purview of council's responsibility. This is simply a distraction from the fact that this gang is unable to accomplish any of its core tasks.
Anon 7:06,
That's a question the courts must answer. Perhaps you're right.
Anon 8:11,
For once, I'll defend McClure. Even if you oppose the idea of a conciliation process, our rising foreclosure rate in NC is a problem. It is government's responsibility to pay attention to people in need. McClure was very well-prepared yesterday and invited some good people to speak. The Sheriff and Clerk, Civil were therer to detail the problem. Alan Jennings was there to describe what his offfice is doing. Chris Reed talked about what attorneys are considering. Onembo discussed judicial concerns. Molchany from LV Realtors was there to make your point, too. It was a good meeting and I have to give credit where credit is due.
Now excuise me while I go hurl.
"It bails out the irresponsible and steals an opportunity from first time buyers who have traditionally benefited in these cycles."
First time homebuyers are getting squeezed in this cycle. There is little/no credit and what credit does exist requires fees that most first time homebuyers aren't able to purchase. From a pricing standpoint, they should benefit, but from a credit standpoint, they aren't.
Bravo to those involved. Clearly fed and state laws aren't doing their jobs. It is completely within the scope of responsibility for county gov't to address the foreclosure process. Nobody is suggesting the expenditure of taxpayer dollars to address this challenge. The counties are simply adjusting the foreclosure process. Courts are allowed to change their procedures on a variety of fronts. This is one of them.
And the question of disparity of rights is mute b/c the jurisdiction at which this matter is handled is the county court, not the state courts. Should state courts get a clue, yes, but the parity of rights exists within jurisdictions in PA unless otherwise noted in Statute or Constitution (some rights are absolute in PA, others are left to each jurisdiction's procedures). On this matter, it's be relegated to the counties to do as they deem appropriate (within certain parameters).
My guess is that the state will follow suit after about 50% of the counties have changed their foreclosure process.
Bravo to all involved in this. Bravo to you too Bernie. You started pointing this out over the summer and started some really good conversations on how this could be done. I know it prompted me to do some research. It's time to make sure Lehigh County is doing what it can to protect homeowners in a similar manner.
Geoff, Thanks. I will add that thouse who oppose this idea have legitimate concerns, too. To me, it is important and encouraging that the county, including the courts, is considering the crisis.
Anon 7:06 worries that diverging local rules may hamper those who rely on uniformity. Local courts do have the authority to enter their own rules, and I do not enb\vision a conciliation process that would trample all over the rights of either party. Like local rules providing for jury trials v. arbitration, I see this more as a procedural matter.
But will it be effective? Alan Jennings talked about his success rate, which is low. That would go up if lawyers got involved, but would borrowers look at this as a gimmick to renogotiate mortgages.
Finally, there is the question of cost. Chris Reed talked about lawyers volunteering their time, but Onembo noted it would be difficult to avoid costs. The civil division would probably have to add a person to track these foreclosures and identify owner-occupied properties. The mediator may have to be paid.
I'll acknowledge that there are many things to consider before entering into this decision. The concerns of uniformity, in my mind and only on this subject, are based in self-interest, not in jurisprudence. Those who rely on uniformity are probably not on the verge of losing their home. Lawyers, banks, accountants and such care, but they are rightly labled interest groups. Still valid as a concern.
Costs need to be better understood. Can the county afford to hire another staff person? Or is there perhaps another staff person who can be diverted in the short term? Are there parts of the courts or exec branch that are experiencing a lighter workload as a result of the real estate market who could assume new responsibilities short term?
As far as efficacy, I think if even a small number of foreclosures are prevented through process (not through bailouts), then it has been effective. The question is whether or not the cost justifies it. I am interested in knowing more about hard costs.
Back to the research table...
It is good to see Alan Jennings helping other areas of the Lehigh Valley with the same type of solutions that have helped Allentown so much.
Must disagree with gsbrace re: availability of credit for first time buyers. I have firsthand experience within the last three weeks that there is plenty of money available to first time buyers through traditional FHA (operating business as usual) and community banks that, despite Sam Bennett's statements, have fared quite well vs. their larger competitors.
This initiative sticks it to those who normally benefit from these cycles and protects banks and a tiny minority of irresponsible borrowers. 95% of us have properly adjusted our budgets and priorities to continue to pay our mortgages on time. I've had to do so despite a layoff and substantial loss of income.
Council is working on something it needn't. Council is just trying to look like it can do something - anything. Their ploy worked. Bernie's in the boat - albeit a bit seasick.
Anon 9:58,
Mr. Molchany made that point yesterday, and i probably should have noted it. In fact, all agreed the market is ideal for first time home buyers.
As far as what council can do, it's pretty much nothing. That was clear, too. This will be up to the courts. Council can come up with a program, but the court has to adopt it.
Having said that, I think yesterday's coimmittee meeting was the most productive I've seen in ther last two years. Clearly, there is a problem. A group of knowledgable people had lots of good suggestions. There was none of the partisan bickering that has become all too common. You may not support the idea of conciliation, and I respect that. In fact, you may even be right. But I like the idea of outting the problem on the table and discussing it.
I’d like to post a link to Bill Moyer’s JOURNAL that presented two different perspectives on Facing Economic Troubles (http://www.pbs.org/moyers/
journal/blog/2008/07/ scroll down) about our troubled economy and how it could roll over us in Northampton County. There are two sub-links to the actual re-broadcast of the analysis. Frustrated citizens of Cleveland grappling with their community’s extraordinarily high rates of foreclosure. (http://www.pbs.org/moyers/
journal/07182008/profile.html) & Bill Moyers spoke with journalist William Greider (http://www.pbs.org/moyers/
journal/07182008/profile2.html)
Bernie
"It is government's responsibility to pay attention to people is need".
That might be true ii a country under statism but not here. If we do not get back to the idea of personal responsibility we are going to wake up in a socialist state.
Bernie, was there any discussion about the # of primary residence foreclosures vs. investment / commercial property foreclosures?
As far as I'm concerned, I want to try to help the primary residence people, but the investment and commercial people? No.
I wonder what the figures would look like excluding those pieces?
The Banker
Good point, Banker. But lets look at primary residence foreclosures. I saw an ABC News story last week about a married couple, one child, he works a laborer's job, she's pursuing her masters and not working. They were given a $300K mortgage with no down payment and now can't handle the mortgage. The woman seemed smart enough to be pursuing a masters and still couldn't see how precarious a position they were getting into. She admitted surprise that they were financed in the first place. The right to stupidity should remain legal and untethered in our country. There are people who are truly down and out through no fault of their own. I guess they'll have to wait while we make banks whole again.
Anon 3:32, you're right that smart people did stupid things. But I don't know of any other way than to split out the primary residences from the other.
Also, from a lending perspective, I believe it will be far cheaper for the banks to mediate solutions and keep the homes occupied than take the keys / foreclose. Banks are terrible at owning real estate, and their recovery after going through foreclosure will be a lot lower than working out solutions.
The Banker
Agree Banker. Let the parties work through their contracts.
"Bernie, was there any discussion about the # of primary residence foreclosures vs. investment / commercial property foreclosures?"
That's an unanswered question. Everyone agrees, however, that conciliation should only be available to owner-occupied properties. Moreover, Jennings made clear yesterday that banks themselves have acted ethically. Some credit groups, however, have put together loan packages that are simply unrealistic.
I'm glad everyone locally agrees - my fear is that Washington doesn't, and there will be major pushes for mortgage assistance there. Why not spend some more tax $$!!!
I've seen Alan Jennings make the same point - the bankers and CACLV are on the same side on this one.
The Banker
Bernie, From Anon 7:06 AM
Another point is depending on the judge, what will occur in these conciliation hearings? On the news the other day, I saw this woman crying because she couldn't pay her $300,000 mortgage. She didn't pay her mortgage, so she went to one of these hearings. Now she's paying, because her interest rate fell to 5%. Where the hell do I sign up? You mean if I don't pay my mortgage, I can plead poverty (with a $300,000 home mind you!) and go from 9% to 5%?! You've got to be freakin' kidding me! What happens to the rest of us, who made a commitment to the banks? We get hosed again!
Anon 7:14,
Yeah, As was pointed out by a friend last night, there are jerks who will try to use the mediation process to reduce their payments. But this program is not intended for them. McClure sent me his opening remarks, and I am loading them up for tomorrow. It's worth considering.
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There is more foreclosure grants and bailout money available for you! Claim your free bailout money!
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