July 17, 2009
Philadelphia Inquirer

Foreclosure filings rise as unemployment takes toll

By Alan J. Heavens

Foreclosure filings across the country increased 9 percent in the first six months of 2009 compared with the same period in 2008. One in every 84 U.S. homes had a filing during that time, according to RealtyTrac of Irvine, Calif., which tracks foreclosures nationwide.

Filings continued to be concentrated in the Southwest and Florida and in Midwest states dependent on the auto industry, where unemployment has been rising.

Pennsylvania ranked 31st among the 50 states in number of filings (one in 230 homes), and New Jersey was 21st (one in 146 homes), RealtyTrac said. In No. 1 Nevada, there was one foreclosure filing for every 16 houses.

"Pennsylvania foreclosure activity places the state well below national average for the entire period measured," said RealtyTrac chief economist Rick Sharga. "It appears that state and city initiatives have had a positive effect on foreclosures, and that bodes well for the Pennsylvania real estate market."

New Jersey's foreclosure numbers have dropped over the last quarter, Sharga said, "but we believe that this is a 'false positive,' based more on legislative delays in foreclosure proceedings and a backlog in the court system than on any real progress."

Rising mortgage-delinquency rates indicate unemployment is feeding the numbers.

"I would say that foreclosures as a result of loss of income are on the rise, and have been for several months," said Ian Phillips of Pennsylvania ACORN, which works for affordable housing.

Patricia Hasson of the Consumer Credit Counseling Service of the Delaware Valley said her counselors report "seeing clients with middle and higher income coming in due to cutbacks in company benefits, having to accept lower pay to keep their job, reduction in overtime, and self-employed people whose business slowed due to the economy."

The increase in foreclosure filings because of income loss has put pressure on Pennsylvania's Home Emergency Mortgage Assistance Program. HEMAP provides loans "to get people through a period of income loss," said John Dodds of the Philadelphia Unemployment Project.

The program, which Dodds said had saved more than 41,000 houses, is now "underfunded, as the state struggles with a large budget deficit and has thus focused 80 percent of assistance to those who . . . need less risky arrears-only loans."