HARRISBURG — Accountant Sherman Lett was hoping for a piece of the American dream four years ago when he purchased his first home, a $79,000 half-duplex in downtown Harrisburg.

Then two jobs disappeared and the city raised property taxes. Lett fell thousands of dollars behind on his mortgage before finally declaring Chapter 13 bankruptcy on Wednesday, the eve of the scheduled sale of his home by the Dauphin County sheriff.

Now Lett will have to pay off nearly $19,000 in back payments, penalties and legal fees over the next five years, and his credit is ruined.

“But I still have my house,” he said Thursday.

Mortgage foreclosures and sheriff’s sales of homes have reached crisis proportions in parts of the state, said Pennsylvania Banking Secretary Bill Schenck.Though foreclosures may have already peaked, the fallout continues across Pennsylvania — with sheriff’s sales hitting record levels in some areas and homeowners like Lett resorting to desperate measures to save their homes.Only now are officials around the state beginning to get a picture of how widespread the foreclosure crisis has been.“The counties that we’ve looked at so far, there are very few that haven’t had a fairly dramatic rise in foreclosures over the past four years,” Schenck said.In a recent interview, the banking secretary said he wants new legislation to clamp down on predatory lending practices, which he said have contributed to the foreclosure problem.The number of loans in foreclosure in Pennsylvania reached an all-time high of 2.44 percent in the first quarter of 2002 and then started edging down, according to data from the national Mortgage Bankers Association. By the first quarter of this year, 2.08 percent of loans were in foreclosure.But Pennsylvania still has the sixth-highest foreclosure rate in the nation, and state banking officials are reserving judgment on whether the situation has really improved. They are awaiting statewide foreclosure data being gathered in a study requested by lawmakers from northeastern Pennsylvania, including hard-hit Monroe County.Already, there are numerous signs that the expansion of home ownership in recent years has been a sweet dream turned sour for Pennsylvanians in broad swaths of the state.n In eight south-central Pennsylvania counties, according to a study that counted filings at each courthouse, foreclosures more than doubled from 1997 to 2002. That region of the state has a comparatively healthy economy and low jobless rate.n The Allegheny County sheriff set a record last year by auctioning off nearly 4,400 properties, and this year is on track to break 6,000. The average foreclosure in the state takes about a year, so even if an improving economy leads to a decline in foreclosure filings, sheriff’s sales are expected to play out for some time.n Philadelphia County postponed for a month the auction of 559 properties this spring to give an ad-hoc group time to help those residents save their homes. Similar moratoriums have been considered in other parts of the state.n With a population of about 160,000, Monroe County has experienced more than 6,100 foreclosures in the past decade. Many home buyers were attracted to the area by aggressive marketing in New York City, only to find out later they couldn’t afford the payments. Civil suits filed by the state attorney general’s office are pending against the developers. The results of a separate Banking Department-funded study, focusing only on Monroe County, is slated for release next month.n In Perry County outside Harrisburg, sheriff’s sales until recently consisted of just three or four properties each quarter, said Sheriff Carl E. Nace. “Now we’re up in the high 20s and 30s,” Nace said. “A lot of it is divorce rate and some of it is they’re just loaning too much money. They’re borrowing money against property for other things.”No single cause is to blame for so many people losing their homes, said Ira Goldstein, director of public policy and program assessment for the Reinvestment Fund. The Philadelphia nonprofit organization lends money and provides other financial services to underserved low- and moderate-income areas.Goldstein, who is overseeing both Banking Department studies, attributes the rise in foreclosures to such factors as the weak economy; a relatively high rate of penetration of subprime loans, issued on less favorable terms to people with less-than-stellar credit; and poor decisions by both lenders and borrowers.“You see instances where people got loans that they really shouldn’t have gotten. That the extent of credit that they had, given their amount of income and payment history, (was) probably beyond what they should have had,” Goldstein said.Subprime loans have a much higher rate of foreclosure than conventional loans, and they have become more common across the state. For example, in Lebanon County, 42 percent of home foreclosures in 2002 were attributed to subprime loans, compared with 18 percent in 1997, according to the South Central Assembly for Effective Governance, a coalition of government agencies and businesses in the greater Harrisburg region.“There has been this proliferation of companies that don’t have roots in the community and (they) do pretty aggressive marketing using television and the Internet and direct mail,” said W. Craig Zumbrun, the group’s executive director.Laura Armstrong, spokeswoman for the Mortgage Bankers Association in Washington, D.C., said unemployment, rather than a high percentage of subprime loans, drives the foreclosure rate.“When we see new jobs being created, we see a decline in the number of delinquencies and foreclosures,” she said.Samuel B. Morelli, president of Sunset Mortgage in Chadds Ford, said the booming business in sales being done by sheriff’s departments across the state reflects an already-passed spike in foreclosures.“You’re seeing the residue of that peak period,” said Morelli, a member of the Pennsylvania Mortgage Bankers Association board of governors.Schenck said the Rendell administration expects to bring a lending-reform proposal to the Legislature later this year, but declined to go into specifics.He said details will depend on the results of the Reinvestment Fund study and the recommendations of a Banking Department task force. When that is finished, Schenck expects to revisit reforms to Pennsylvania’s mortgage-banking law that went into effect in 2002 — a law critics say has not done enough to protect consumers.