May 2, 2007

NEWS: Penn. Foreclosures on the Rise

Victoria Reider, acting secretary of banking for the state of Pennsylvania, reported recently that rising foreclosure rates are causing high levels of distress among less affluent areas of the state. Because the subprime market is in trouble, and those with credit trouble and/or lower incomes have always been the target of these loans, there is starting to be a distressing effect among these families, said Reider.

There is major concern about predatory lending in the Pittsburgh area, these days. Community development group The Reinvestment Fund states that over two-thirds of the foreclosures in Pennsylvania in 2005 were subprime loans. A rep with the group said that shady lenders are only contributing to the problem. Hence, the skyrocketing eviction rate in the state, especially in the western part. Police, who are saddled with the unsavory job of putting families out in the street when they can’t handle their monthly mortgage, report that suicides related to foreclosures seem to be on the rise. In some areas, deputies serve notice to 50 or 60 homeowners per day.

The problem is, said Reider, that predatory lenders are trapping desperate potential homeowners into contracts they can’t possibly expect to uphold. Many are based on adjustable rates, which grow out of control after the first year. Plus, foreclosures bring down neighborhood home values, which more often than not leads to a domino effect on poor areas.


   Back to News Main Page