With 895 mortgage foreclosure cases going before judges in Lycoming County between 2008 and 2010, two judges and several area agencies embarked on a collaborative effort to reduce the number of foreclosures in the county and provide homeowners with the chance to work out alternative arrangements with their lenders to remain in their homes.
Joseph Campagna, a counselor with the STEP Housing Office, said a conversation between himself and Judge Richard A. Gray about the frustrations of the foreclosure process for many homeowners was the impetus for the Mortgage Diversion Program in Lycoming County.
Campagna said the Lycoming Law Association, the STEP Housing Office, North Penn Legal Services, Gray and Lycoming County Judge Dudley Anderson have been instrumental in making the diversion program's first year successful.
Many lawyers donated their time through the law association and North Penn Legal Services to work pro bono on a number of the mortgage foreclosure cases in the program.
According to Kevin Way, Lycoming County Court administrator, 59 diversion conferences involving 44 separate cases were held and of those cases, 58 percent resulted in a settlement that allowed the homeowners to keep their homes in the program's first year.
"A lot of folks who had interruptions in income have been successful in getting things resolved," Anderson said of the program's success.
When homeowners are served a foreclosure notice, they also are given the paperwork to apply to the diversion program within 30 days and set up a conference with their lender about their case in county court.
Applicants must live in owner-occupied residences and must demonstrate an ability to make payments on the mortgage to qualify for the program.
Campagna and Gray said one of the frustrations many homeowners expressed was simply being able to speak with their lenders to work out a solution.
"The vast bulk of our mortgages are not held by local banks, and national banks don't really want to own property in Lycoming County," Gray said. "People couldn't get a hold of anyone to talk to about their situations."
Gray said the conferences create a designated space to work out a solution, typically either a temporary or permanent loan modification resulting in smaller monthly payments.
In light of the local housing crisis, he said, it is important to offer homeowners the opportunity to remain in their homes.
"We started with modest goals. We thought it would be a success if we could help one out of every five people," Gray said. "The important thing to us was helping people and keeping them in their homes."
Because of interruptions in income through illness, injury or loss of employment, many of the homeowners involved in the program have had a difficult time getting back on track, Campagna and Gray said.
"Once you get two or three months behind, it's really difficult to get caught up. It's a domino effect," Campagna said. "When it gets to court, we've at least got the protection of the system while we work through it."
Campagna said locally the STEP office offers home ownership and credit counseling to help county residents budget for purchasing and maintaining a home.
Anderson said the program is essentially a win-win situation for the homeowners and the banks.
"Banks were pleased because they were getting their money," Anderson said. "Homeowners were happy they now had smaller payments."
Additionally, by applying to the program, homeowners, through the support of the STEP Housing Office and North Penn Legal Services, also are able to apply for federal and state mortgage assistance and relief programs, Jennifer Heverly, of North Penn Legal Services, said.
Heverly noted that many people in these situations, particularly with a temporary loss of income, didn't know help was available to them, including the Pennsylvania Homeowner's Emergency Mortgage Assistance Program and the Home Affordable Modification Program.
But with funding for the emergency assistance programs drying up, she said the diversion program, with support from the community partners, will be an avenue through which many county residents facing possible foreclosure may remain in their homes.
