Foreclosures are piling up in Penn Hills
Penn Hills has experienced more home foreclosure actions over the past four months than any other Allegheny County municipality, outside Pittsburgh.
Population is part of the reason. With more than 40,000 residents, Penn Hills is the county's largest municipality outside the city.
But experts say economic factors, recent court decisions and a federal mortgage fraud investigation also could be reasons for the high rate.
Sheriff's sale listings show 83 Penn Hills properties went into foreclosure proceedings since May.
And RealSTATS, a South Side-based real estate information company, puts Penn Hills' ratio of foreclosures to home sales at 25.4 percent, meaning one of four homes sold there over the past 4 1⁄2 years has gone into foreclosure.
The county average is 11.8 percent.
“We have neighborhoods that have tremendous problems with foreclosures, and for that matter, high levels of demolitions,” municipal Planning Director Howard Davidson said.
“Then we have other neighborhoods that have no problems whatsoever.
“I think that most realtors and investors would continue to describe the real estate market in Penn Hills as a good deal.”
Home sales in Penn Hills climbed steadily from 2000 and peaked in 2006, but the community's median home price dropped from $79,900 in 2006 to $58,000 in 2012 although it rose to just over $59,000 in the first half of this year.
The burst of the U.S. housing bubble is a factor. Penn Hills hasn't experienced a year with fewer than 100 foreclosures since 2002, and had a high of 191 foreclosures in 2008.
Realtor Libby Sosinski of Keller Williams has been involved with several Penn Hills foreclosed properties and said a state Superior Court ruling has played a part in high foreclosure rates in Penn Hills, and statewide.
Shaler resident Pamela Vukman, whose home went into foreclosure in 2006, challenged wording in a state law that mandated foreclosure notices include information about loan modification and credit counseling opportunities, and said a notice from her lender didn't meet requirements.
The court ruled in her favor.
As a result, state courts lacked jurisdiction for about seven months in cases involving problem notices, and many foreclosures weren't held.
Gov. Tom Corbett later signed a law giving the courts retroactive jurisdiction, and the state Supreme Court upheld it after a challenge, Sosinski said.
“Following the Supreme Court ruling, some of the foreclosures had to be filed over again,” she said.
Sosinski said her business has “increased crazily” since February.
“Many of the properties we've listed have been sitting vacant for a couple of years,” she said.
Meanwhile, according to federal prosecutors, two real estate agents, George Kubini, 48, of Verona and Dov Ratchkauskas, 46, of Pittsburgh, sold property at overstated prices to buyers who couldn't qualify legitimately for loans.
The homes were financed through fraudulent documents submitted to lenders, including some that falsely showed down payments.
The federal government is seeking a return from Kubini and Ratchkauskas, who were principals in Admiral Capital and other real estate companies, of $1 million in cash and property, which were the gross proceeds of their scheme between November 2005 and December 2008.
Kubini and Ratchkauskas were indicted in January 2011, and face more charges filed in March.
Six other people indicted, including mortgage brokers and employees at various financial institutions, have pleaded guilty.
According to U.S. District Court documents, Kubini and Ratchkauskas sold at least three Penn Hills properties that are alleged to have been part of the scheme, and sold more than 150 properties in the Pittsburgh area totaling more than $10 million.
The U.S. Attorney's office declined comment on how many Penn Hills homes are involved.
Patrick Varine is an editor for Trib Total Media. He can be reached at 412-320-7845 or firstname.lastname@example.org.