Default Dilemma.

A Pennsylvania study recently found what many in one pocket of the state have suspected for a long time. The study of 6,100 foreclosures in the Pocono Mountains region of the state, an area where the foreclosure rate is stunningly high, found that aggressive home sales and mortgage lending practices contributed to the area's problem.

According to the report, developers of a cluster of gated communities located about two hours outside of New York City bear much of the blame for the problem. They allegedly lured former renters from greater New York to the Poconos and sold homes to them at prices exceeding market value. Add to that a level of frustration related to rising crime and long commutes to work, and pretty soon many homebuyers were unable or unwilling to keep making their mortgage payments. Unfortunately, the homes have become something of a tough sell, despite a booming real estate market in the New York City area.

Servicers may not be able to stop aggressive developers and real estate agents from making some sales that shouldn't be made, but everyone in the mortgage industry has a stake in making sure that debacles like the Pocono Mountains situation are not repeated. Loose underwriting and faulty appraisals may be ...