How Is Philly’s Foreclosure Prevention Program Working So Well?by Tim Manni
After one year the statistics of Philadelphia’s Mortgage Foreclosure Diversion Pilot Program are in — and they are puzzling to say the least. The program was able to save 60% of homes from foreclosure:
Philadelphia’s Mortgage Foreclosure Diversion Pilot Program, seen as a national model to stem the foreclosure crisis, resulted in 2,776 properties permanently or temporarily saved from sale between its inception in June 2008 and May 31 this year out of 4,690 that were referred to the program, according to new data.
We find their results puzzling because we don’t understand how one city’s foreclosure prevention program is achieving such a higher level of success than the existing programs. The OCC and the OTS’s Mortgage Metrics Report for the first quarter indicated that existing loan mod programs succeeded in modifying over 50% of loans with a lower monthly payment. But after six months, “24 percent of the mortgages that had monthly payments reduced by 20 percent or more were 60 or more days past due…”
We’ll certainly have to dig into Philadelphia’s program further. We’ve been looking for more details on their program but really haven’t found too many so far. Stay tuned as we continue to do more research.