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PA Live: Upside Down Homes

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IN A PERFECT WORLD — YOUR HOUSE SHOULD NEVER BE WORTH LESS THAN YOUR MORTGAGE.
     BUT A NEW STUDY SHOWS THAT MONROE COUNTY HAS MORE “UPSIDE DOWN” HOMES — THAN ALMOST ANY OTHER COUNTY IN THE NATION.
     AND OTHER PARTS OF NORTHEASTERN AND CENTRAL PENNSYLVANIA — AREN’T DOING MUCH BETTER.
     HERE’S I-TEAM REPORTER KELLY CHOATE.

 For many of us, buying a home is part of the American Dream, but sometimes that dream can feel more like a nightmare.

Many homeowners across the Commonwealth are facing tough choices, because their biggest investment has become their biggest financial drain.

Kerri Gowarty gave me the grand tour of her Scranton home.  She and her husband Mark bought their property about 15 years ago.

“I figured it would be a great house to spend the rest of our lives in and raise the kids,” said Kerri.

For the most part, it has been.  As their three children move out, Kerri and Mark are ready to move on.

The couple wants to move somewhere with warmer weather, but at least for now, that dream is on hold, because their mortgage is “upside down”.

Kerri told the I-Team their home was recently appraised at $238,000.  They owe $289,000.

“I was very disappointed to think that we probably won’t be able to sell it,” said Kerri.

The Gowartys aren’t alone.  In fact, nearly 19% of homeowners in Lackawanna County are in a similar situation with mortgages that are “seriously underwater”.

But in parts of the Poconos, the statistics are even more staggering.  Monroe County ranks seventh in the nation for homes with market values that are at least 25% lower than the balance remaining on the mortgages.

To put that in perspective, the national average is about 9%, but in Monroe County, it’s almost 27%, meaning more than one in four homes are “upside down”.  Those numbers are from ATTOM Data Solutions.

The I-Team talked to Senior Vice President of Communications Daren Blomquist on Skype.  He said we’re still seeing remnants of the Great Recession from a decade ago.

“In most parts of the country, that issue has subsided, because home prices have risen, pretty dramatically in a lot of parts of the country, but we do still see some markets kind of left behind,” said Blomquist.

While the local economy is part of the problem, there’s another issue — property taxes.  According to ATTOM Data Solutions, Pennsylvania had the sixth highest property tax rates in 2017.

“It can drag down home price appreciation, which keeps more people in this state of having negative equity or being underwater on their homes,” said Blomquist.

It’s something Amie Cosentino, a real estate agent with Century 21 Select Group in Blakeslee, deals with every day.

“The property taxes are definitely high,” said Cosentino.  “I’ve seen them here around $5,000, $6,000, $7,000, even $8,000 a year, and then you have HOA fees on top of that.”

Cosentino specializes in short sales, which is a possible solution for people trapped in debt-logged homes.

“In a short sale, I’ll work directly with the homeowner’s lender to get the lender to release the lien and sell the property for less than what’s owed on the property,” said Cosentino.

She said past due taxes, HOA fees, even some utility bills can also be negotiated in a short sale, and the homeowner doesn’t have to pay the typical closing costs that come with selling a property.

“It’s better for your credit to do a short sale than to go through a foreclosure or a bankruptcy,” said Cosentino.  “Most people can repair their credit in about two years of doing a short sale.”

That being said, a homeowner needs a valid hardship to qualify for a short sale, like losing a job or the death of a spouse.  Cosentino told the I-Team many of her applicants get approved.

But for Kerri and Mark, who are fortunate to have good jobs and able to make their mortgage payments, all they can do is try to bulk up their savings and stay focused on the future.

Even though they feel stuck in their “upside down” dilemma, they know it could always be worse.

“I’m sure there are a lot of people out there who aren’t as blessed as we are!”

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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