Real Estate Information Archive


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You probably figure if your house is being foreclosed on in county court, it’s too late.

Not so, if Cumberland County Court President Judge Kevin Hess has his way. Read this article from

Hess wants to start a foreclosure mediation program similar to divorce mediation, where the court uses its power to bring parties together one last time to work things out — in this case to avoid someone losing their home.

Nobody wins in a foreclosure, including banks that don’t want to own the properties, Hess said.

Some states, including New York, have laws requiring a settlement conference between the mortgage holder and homeowner before a property can be foreclosed on and sold.

Pennsylvania has no such law, although legislation has been introduced that would make every county court in the state establish a foreclosure mediation program.

For now, each county is free to decide whether to have foreclosure mediation. The state Supreme Court is encouraging counties establish foreclosure mediation and Hess said he was motivated to start a program in Cumberland after attending a conference on foreclosure mediation in October.

Cumberland would be the first midstate county court with foreclosure mediation. Neither Lebanon, Perry nor York counties offer the program.

Dauphin County Court Administrator Carolyn Thompson said county judges considered starting a mediation program in 2008-09 after Philadelphia established a program. Dauphin formed a task force to study the issue and sent staff to a state Supreme Court workshop.

“Ultimately, however, our review of the dockets revealed that our numbers of foreclosure filings had not taken, and still have not taken, the dramatic upturn that other areas of the state may have seen,” Thompson said. Because of the advance work Dauphin has done, Thompson said the county could quickly have foreclosure mediation in place if numbers warrant.

Cumberland’s program would likely mirror those of other Pennsylvania counties, where filing foreclosure in court triggers the issuance of a notice of a mediation program to the homeowner.

The homeowner has a certain amount of time to contact a housing counselor designated by the county, leading to the setting up of a conference between a representative of the mortgage holder, the homeowner and the counselor.

The foreclosure is then put on hold pending outcome of the conference. Mediation often involves several conferences over months.

Conferences are usually presided over by a court official, be it someone the county appoints similar to a divorce master, or a judge. In some counties lawyers are available to homeowners pro bono if the homeowner can’t afford representation.

Except for Philadelphia, where mediation is automatic when a foreclosure is filed, mediation only takes place in other Pennsylvania counties if the homeowner requests a conference.

As a result the potential benefit of court mediation is less than it could be because of low participation rates by homeowners, in part due to time limits imposed on homeowners to request a conference and submit required documents, said Geoff Walsh, a staff attorney with the National Consumer Law Center who tracks foreclosure mediation programs.

Walsh in a September 2009 report said the effectiveness of court foreclosure mediation was undercut by the balance of power favoring the mortgage holder at the expense of the homeowner. He also noted a lack of reporting requirements for counties with foreclosure mediation, making it hard to assess value of the programs.

Since Lackawanna County court started foreclosure mediation two years ago, 53 percent of cases where homeowners request mediation have been successful, with agreements between the mortgage holder and homeowner and voluntary dismissal of the foreclosure action, according to county Judge Terrence Nealon, who runs the program.

Another 30 percent of cases are pending due to negotiations or temporary agreements, while 17 percent failed and the mortgage holder proceeded with foreclosure.

Nealon said the most common successful outcome is where a lender agrees to restructure the mortgage at a lower interest rate, often combined with extending the term.

“It’s not a program trying to have people live in homes free of charge. It’s a dual goal of keeping people in their home but making the loans performing again under terms [the homeowner] can satisfy,” Nealon said.

By the numbers

Here are the numbers for mortgage foreclosure cases filed in midstate county courts for 2011 so far, compared to full-year numbers for 2010 and 2009.

Cumberland County
2011 year to date: 182
2010: 561
2009: 538

Dauphin County
2011 year to date: 296
2010: 962
2009: 1,011

Lebanon County
2011 year to date: 131
2010: 383
2009: 334

Perry County
2011 year to date: 53
2010: 142
2009: 130

York County
2011 year to date: 588
2010: 2,080
2009: 2,142

In the wake of news stories that the US will face a government shutdown and default on its outstanding loans if a debt ceiling agreement isn't reached, many people may be wondering what the impact would be to the mortgage industry and closings.The last time we went through a government shutdown in 1995, it was a pain, but not a panic. If a shutdown were to occur again, mortgage expert Linda Davidson points out the following top six areas that could be impacted:

1. FHA Case Numbers: For each FHA loan, we are required to order a FHA case number. This number is generated before an appraisal can even be ordered. With a shutdown, we may not be able to order case numbers. Because of this, it is critical to let us know if there is a contract executed on any loan, so that our office can go ahead and order a case number without risking the loan being on hold during a shutdown. Note: with the new FHA guidelines, a contract must be executed before a case number can be ordered.The ability to close FHA loans is questionable, depending if HUD keeps its website running to obtain FHA case numbers and CAIVRS. During the November 1995 shutdown, case numbers could not be obtained, but this was prior to the internet and was a manual process. The shutdown in 1995 mainly caused a delay rather than a drop in FHA loan origination. But if lenders decide to stop accepting FHA applications, it could be a problem. I think we may see delays but not a complete shutdown of the FHA.

2. 4506 IRS Transcripts: Each loan requires the verification of at least one tax return by the IRS to verify the numbers that each customer presents on their tax returns. During a shutdown, this process would be delayed as the IRS wouldn't be at work to verify the transcripts.

3. Verifying Employment of a Government Employee: We are required to verify the employment of each customer. If the customer is a federal government employee, we would be unable to verify his or her employment during a shutdown.

4. FEMA: Homes in a Flood Zone: Homes that are determined to be in a flood zone would not be able to close as flood insurance could not be obtained.

5. USDA: During a shutdown, the USDA office would be closed because they have government underwriters that insure behind the lender. With a shutdown, we would see delays with all USDA loans.

6. VA: Like the FHA, the disruption is possible - but not absolute - during a shutdown. This would all depend on if they continued to allow their website to function. A disruption would cause delays in VA appraisals and the issuing of certificates of eligibility. If the website was closed during a shutdown, we would see delays in all VA loans.

Stay tuned for updates if necessary on this very important time period. And if you have any questions, please call or email today.

Mileage Rates Go Up Due to High Gas Prices

by Don Roth

If you drive a car, truck or van for work, you'll be able to get an additional 4.5 cents per mile. Beginning July 1, here are the standard mileage rates for the remainder of 2011:

  • Businesses = 55.5 cents per mile driven (up from 51 cents through June)
  • Medical or moving = 23.5 cents per mile driven (up from 19 cents through June)

The Internal Revenue Service (IRS) increased the mileage rate in response to the recent high gas prices. These mileage rates are used to calculate deductible costs for driving an automobile for business, medical and moving purposes. NOTE: The rate for driving that is related to charities remains unchanged at 14 cents per mile, since that rate is set by a statute. You can read the official release in the IRS' Announcement 2011-40.

Make Sure You Qualify

Before you calculate your deduction, make sure you qualify. The IRS reminds taxpayers that they cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

Additional Option

Although the IRS provides the standard mileage rate for ease and convenience, you're not required to use it. If you prefer, you can calculate the actual costs of using your vehicle instead of using the standard mileage rates.

Remember, if you have questions are concerns, talk to a tax consultant or accountant to discuss your options and unique situation.

Disappointing Jobs Growh Report - July 2011

by Don Roth

"HE THAT SPEAKS MUCH, IS MUCH MISTAKEN." Those words by Benjamin Franklin rang true last week, after a report earlier in the week had the markets buzzing about the potential for a strong Jobs Report... only to have those expectations crash at week's end. Here's what happened and how it impacted Bonds and home loan rates.


job growthMajor shocker. According to the Labor Department's "Non-Farm Payroll" Jobs Report, only 18,000 jobs were gained during the month of June. That number was significantly below the recently upwardly revised gain of 125,000 new jobs that were expected, and showed employers hiring the fewest number of workers in 9 months.

Unemployment ticks up. The Unemployment Rate was also a disappointment, rising from 9.1% to 9.2%. While this facet of the report isn't unexpected - as the Unemployment Rate can rise as more people re-enter the labor market in "job seeker" mode - the overall disappointing report re-ignites fears that the economic recovery is slowing and remains a bit stagnant.

Is there a silver lining? There was one somewhat bright spot in the Jobs Report. All of the job gains came from the private sector, with government agencies being the ones losing jobs as they deal with budget pressures. So while gains have slowed, the growth that exists is at least coming from the private sector.

Why were expectations so high? Just one day before the Jobs Report was released, the markets saw the ADP Employment Report, which was far better than anyone expected. Instead of the 60,000 job gains that were expected, the report showed 157,000 jobs added in June. That pleasant surprise boosted Stocks... and also boosted expectations that the Jobs Report would come in better than expected too.

In addition, the weekly Initial Jobless Claims Report also gave the markets a positive outlook on employment, as the report showed a decrease in the number of new unemployment claims. Although the number was still above the important 400,000 mark, it indicated that the previous week's higher number could have been an "anomaly" week - with the July 4th holiday slowing down the count for many states as well as Minnesota's state government shutting down and forcing several thousand state employees to file claims themselves.

Speaking of Minnesota, the state may serve as a warning. In the wake of the state government shutdown, many political and market experts are looking to Minnesota as a glimpse of what could happen at the federal level if Congress and the White House can't reach an agreement. The political climate in the state has mirrored what is happening on the federal level, as the battle continues over a budget deal. And just last week, Fitch Ratings has downgraded Minnesota's debt rating, which means the State will need to pay higher interest rates to investors due to increased risk. No matter how you look at the situation, it's not a pretty picture of what happens when compromise isn't reached.

Overall, the news last week led to volatility both in expectations and in market movement. In the end, Bonds made some strong gains at the end of the week to help home loan rates finish strong. That means rates are still near historic lows and represent a great opportunity. Call or email to see how the situation may benefit you.

Harrisburg PA Mortgage Matters- June 2011

by Don Roth

When transactions are your livelihood, it can be difficult to muster a smile when there are fewer of them. There were fewer transactions in existing-home sales, which fell 3.8 percent to a 4.8 million annualized rate in May. Supply on the market, at 3.72 million units, is falling, but not enough relative to the sales pace, as inventory rose to 9.3 months versus April's 9.0 months.

Price stabilization was the positive takeaway, with the median sales price rising to $166,500. Another plus is that sales of single-family homes, the central component in the report, fell at a slower rate at 3.2 percent. Floods and tornado-ravaging storms in the Midwest were mitigating factors. Blaming the weather is often the easy way out, but this time it appears valid.

Sales of new houses also fell for the first time in three months, by 2.1 percent to a 319,000-unit annualized pace in May, showing that the industry continues to struggle to gain momentum. The good news is that prices continue to rise, with the median price inching up to $222,600 from $217,000 in April, while inventory continues to fall, with supply dipping to 6.2 months from 6.3 months.

Sales are down, but prices are up, which suggests to us that the days of simply giving away homes are over (even with the putative 1.8 million homes in shadow inventory). MacroMarkets, an economic data compiler, surveyed real estate experts on home-price trends. The consensus estimate was for an average annual growth rate of 2 percent, which MacroMarkets co-founder Robert Shiller opined “will not inspire a lot of consumer confidence.”

We disagree, because price growth isn't price contraction. Two percent average-annual growth on a $200,000 home means the home is worth more than $220,000 after five years. What's more, home equity will grow as the mortgage is amortized. Five years is a long time, and no one can know with certainty what the average annual rate of appreciation will be. Given the low price of homes today, though, we would not be surprised to see homes appreciate at a rate greater than 2 percent annually.

Now, we would like to see mortgage rates start to rise. Without artificial support from the Federal Reserve, interest rates would naturally move higher. That's not bad; the market needs to get back to equilibrium – with more private mortgage money and private mortgage-backed securities, so we can have more choices and more lending alternatives. A rising-rate environment also implies that there are other positive things happening in the economy.

Mortgage rates continue to hold historical lows. Low rates coupled with stable-to-rising prices in many parts of the country point to a near-perfect storm of a market for buying residential or investment real estate.

harris burg pa mortgage

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