Few experiencing foreclosures had subprime mortgages, previously regarded as the main culprit in the meltdown of the U.S. housing market
LEMOYNE, Pa., Aug. 4 /PRNewswire-USNewswire/ -- Job loss and unexpected medical bills are among the top factors contributing to home foreclosures in Pennsylvania, according to a survey commissioned by the Pennsylvania Association of REALTORS® (PAR).
Five hundred Pennsylvanians who encountered home foreclosure during the last 12 months were surveyed by Florida-based polling firm Strategic Guidance Systems (SGS) between June 22 and 27, 2010. Fifty-seven percent of the sample said their household had experienced a wage-earner's job loss in the 12 months prior to their foreclosure, while 47 percent said they had been hit by unexpected medical bills. Thirty-six percent indicated they had other "unexpected bills."
Subprime mortgages, which many regarded as the main culprit in the meltdown of the U.S. housing market, appear to have played a minor role in Pennsylvania foreclosures. Forty-one percent of survey respondents held prime fixed-rate mortgages and 12 percent had prime adjustable-rate loans. Only 14 percent carried a subprime mortgage."It's clear that housing market conditions are closely tied to economic conditions, especially employment. Subprime mortgages have never really driven foreclosures in Pennsylvania," said Austin Jaffe, Ph.D., PAR's consulting economist and head of the Department of Insurance and Real Estate at the Smeal College of Business at Penn State University. "The study represents a significant number of Pennsylvanians who have personally experienced foreclosure in some way. They're people from all walks of life, various socio-economic backgrounds and all parts of the Commonwealth," SGS pollster Joel Searby said. Many of those surveyed also did not know about the state and federal programs available to those undergoing the foreclosure process:
- 67 percent of respondents "never heard of" the federal Home Affordable Foreclosure Alternatives Program ("HAFA")
- 57 percent never heard of the federal Making Home Affordable program
- 61 percent were unfamiliar with the Homeowner Equity Recovery Operation program of the PA Housing Finance Agency.