It's the one word homeowners fear more than any other.
Foreclosure.
The story is the same every year: Counties across the country hold sheriff sales, pawning off unpaid-for properties to the highest bidder.
But if the pain is worst for the evicted homeowner, the banks that doled out the failed loans aren't far behind. And as the country is fast finding out, the economy as a whole is a close third.
First the bad news. More than 1.4 million homeowners nationwide lost their homes to foreclosure last year, marking a 75 percent jump from 2006. Experts blame subprime lending -- the practice, essentially, of loaning beyond homeowners' financial means -- as the culprit.
Over the past five years, the number of subprime loans have skyrocketed. They now comprise 20 percent of the mortgage market.
If you're looking for a reason why the economy is slumping, experts say you needn't look further than the dismal housing market.
Now some good news. Foreclosures in the four-county area are a mixed bag. In Union and Northumberland counties, foreclosures are up fairly dramatically.
Union County foreclosures have climbed more than 300 percent since 2003, while Northumberland County foreclosures are up about 30 percent since 2004.
Foreclosures dropped in Snyder County in 2007, and Montour County's 2007 numbers are exactly the same as they were in 2003.
Mortgage lending makes up a sizeable portion of his business, said Donald Steele, president and chief executive officer of Northumberland National Bank.
In 2007, his bank granted 741 home loans. Steele said Northumberland National deals with just a handful of foreclosures each year, and most of those come from failed investments.
Landlords who have run out of revenue from tenants foreclose far more than families, Steele said.
"As I look at where we've had problems, that's primarily where they've come from," he said. "It's generally not a case of people not being able to afford the homes they're living in."
As a family owned local bank, Northumberland National doesn't deal with subprime loans, Steele said. That's fortunate, he said, because foreclosures can affect the value of entire neighborhoods.
"If you get a lot of foreclosures in one neighborhood, it may adversely affect values, meaning homeowners might not be able to refinance as well," Steele said.
Misconceptions
Some people think they can pick up inexpensive property at sheriff sales.
For better or for worse, they're wrong.
Residents rarely buy homes at a sheriff sale, Snyder County Sheriff Joseph Reigle said.
"Ninety to 95 percent of all purchases at sheriff's sales are by banks," he said.
Banks have a vested financial interest in cutting their losses. And when it comes to foreclosures, that means buying back the property and reintroducing it to the market.
"They don't really want to buy it at a sheriff's sale," Reigle said. "They want somebody else to buy it. They just want their money back."
In other words, don't expect to bid $10,000 on a $100,000 home and get the house.
"If your bid is too low, banks will outbid you," Reigle said. "People see these things on TV that you can buy foreclosed properties, but it just doesn't happen. That's not the real world. The mortgage lenders are going to do what they need to do to protect their investment."
Another misconception people have about foreclosures is that families burrow into the home until law enforcement digs them out.
That just isn't true, Reigle said.
In his more than 15 years with the county, Reigle said he's had to physically remove someone from a foreclosed home only twice.
"Most people are pretty cooperative with these things," he said. "They understand. They didn't pay, so they can't stay there."
n E-mail comments to dgessel@dailyitem.com.
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