Philly’s Foreclosure Program Is Becoming A National Modelby Tim Manni
Back in July we wrote about a foreclosure assistance program that was specific to the city of Philadelphia — a program that seemed to be generating far better results than other foreclosure-prevention efforts. Nearly some six months later, Philly’s “Residential Mortgage Foreclosure Diversion Pilot Program” is back in the news, and it’s gaining quite a bit of traction nationwide.
There were only a few details available this summer in regards to the Philly program and why it was as successful as it was. However, thanks to a recent article in the New York Times, we’re beginning to learn more:
Under the rules adopted by Philadelphia’s primary civil court, no owner-occupied house may be foreclosed on and sold by the sheriff’s office before a “conciliation conference,” a face-to-face meeting between the homeowner and the lender aimed at striking a workable compromise. Every homeowner facing a default filing is furnished with counseling, and sometimes legal representation.
But in Philadelphia there is one crucial difference: the mortgage companies have no choice but to participate. They have to attend the conferences and negotiate in good faith or they cannot proceed with a sheriff’s sale.
The Philadelphia program forces an outcome by bringing together all the principals in one room. If the mortgage company proves intractable, the homeowner has the right to request mediation in front of a volunteer lawyer serving as a provisional judge, who relays recommendations to the program’s supervising judge. If the judge finds that the mortgage company is not acting in good faith, she can hold the house in limbo by denying permission for a sheriff’s sale.
As is the case with any foreclosure efforts, several critics are of the opinion that the pilot program merely postpones the inevitable:
“There’s no teeth to the conciliation program,” said Matthew B. Weisberg, a Philadelphia lawyer who represents homeowners in cases involving alleged mortgage fraud. “It’s a largely ineffective stopgap prolonging what appears to be the inevitable, which is the loss of homes.”
Still, Mr. Weisberg grudgingly praised the plan.
“It’s arbitrary and unpredictable,” he said, “but it’s better than what anybody else is doing.”
What about Costs
From the information we’ve read, the City of Philadelphia seems to be picking up the tab. Lawyers who represent the homeowners are volunteers, non-profit organizations canvas local neighbors to provide program information to defaulted borrowers, and every Thursday morning a courtroom in the city’s courthouse is “given over to the conciliation conferences.”
City Program, National Model
Many, including some homeowners, acknowledge that the program is far from perfect. Yet, what makes this pilot program unique is that it has been developed as a highly-localized response to address the specific issues in these neighborhoods. Cities like Pittsburgh and Chicago (who are interested in adopting the program) are looking to cater their efforts specifically to the needs of their city, and we’ll be interested in seeing how their efforts are constructed.
Would adopting a foreclosure-prevention effort like the one that’s taking place in Philadelphia, improve the housing situation in your city or town?