Third and State

With more data is in on home foreclosures, we continue to see big increases in foreclosure activity in Pennsylvania, even in places like Pittsburgh, which avoided the worst excesses of the housing bubble.

The rise in foreclosure activity is being driven by banks moving forward with long planned foreclosures after their settlement with 49 state attorneys general over allegations of fraudulent foreclosure activity. Recent foreclosure activity is also being driven by state budget cuts that eliminated the Homeowners Emergency Mortgage Assistance Program (HEMAP). That program had prevented 46,000 foreclosures since 1983. 

• Alan J. Heavens, The Philadelphia Inquirer — Phila. metro area sees 30%-plus rise in foreclosure filings:

The Philadelphia metropolitan area saw first-quarter foreclosure filings soar by nearly 33 percent over levels for the same period last year, RealtyTrac, which monitors such activity nationwide, reported Thursday...

The Philadelphia metro area was not the only one to see an increase in first-quarter filings. RealtyTrac said filings rose from fourth-quarter levels in 114 of 212 metro areas with populations exceeding 200,000, and in 26 of the 50 largest — including New York, Indianapolis, Raleigh, N.C., and Virginia Beach, Va.

Pittsburgh experienced the largest national increase, 49 percent. Reading’s filings rose almost 27 percent in the same period, while the Allentown-Easton-Bethlehem area was up 9 percent...

Some observers attributed the increased filings in Philadelphia and other Pennsylvania cities to the end of the state’s Home Emergency Mortgage Assistance Program, which had averted foreclosure for 46,000 unemployed homeowners since 1983.

Federal funding that kept the program going after no state money for it was allocated in the 2011 and 2012 budgets ran out Sept. 30.

In addition, the Act 91 notice lenders had to send delinquent borrowers, giving them 30 days to consider options including credit counseling and HEMAP, is no longer required.

In some good news, the U.S. Department of Labor is implementing new regulations that aim to make it easier to compare 401(k) plans. Better transparency in fees and rates of return should help firms and their workers make more financially sound choices. 

• Tim Grant,  Pittsburgh Post-Gazette — 401(k): The hidden costs:

Workers enrolled in company 401(k) plans soon will be receiving more detailed version of their quarterly account statements that will show exactly where their retirement dollars are going.

New regulations by the U.S. Department of Labor go into effect Aug. 30 requiring employers to spell out in detail in 401(k) statements about the fees workers are paying to the plan's managers and the rate of return they are getting on investments...

"What's important about this is it's the first time many plan participants will be able to see things in a simple comparative format to make informed decisions with the investments in their retirement plan," said Sandra Pappa of Buck Consultants, an employee benefits consulting firm based Downtown.

Roughly 72 million workers participate in company 401(k) plans, which have in recent years replaced many company pension plans as the primary vehicle for saving for retirement, putting the burden of investment management squarely on the backs of workers.

And while fees charged by plan providers have a direct impact on the growth of retirement accounts, some participants are not even aware they pay fees for management of the funds.