| Philadelphia's Residential Mortgage Foreclosure | | | | prepare a report for the conciliation conference. This |
| Diversion Pilot Program commenced in May of 2008. In | | | | report would propose a plan for the person facing |
| a very short time it caught the attention of the national | | | | foreclosure detailing how their mortgage could be |
| media because of its success in helping people facing | | | | modified and their home saved. |
| foreclosure save their homes. | | | | A case manager appointed by the court would preside |
| At the end of 2008 78% of the people who had their | | | | over the conciliation conference. The plan prepared by |
| mortgages modified through the Philadelphia program | | | | the counselor would be reviewed. A determination |
| were still in their homes. This was compared to other | | | | would be made if the mortgage could be modified so |
| statistics which showed that over 50% of the time | | | | that the person could make the mortgage payments |
| when mortgages were modified during the first quarter | | | | monthly and save their home or if a sheriff's sale |
| of 2008 the people fell behind on their mortgages | | | | should be ordered because no resolution was possible. |
| within 6 months and were facing foreclosure again. So | | | | The first conciliation conferences were held starting on |
| the results of the Philadelphia program were far better | | | | June 10, 2008. |
| than the national average. | | | | If the people facing foreclosure did not follow through, |
| Part 1 of this series was a general overview of the | | | | meet with the counselor from the housing counseling |
| program. In Part 2 let's take a closer look at why this | | | | agency and attend the conciliation conference, then |
| program is successful. | | | | the Sheriff's sale would be set. The order was sent to |
| First Philadelphia was experiencing the same | | | | them through regular mail. It was feared that many of |
| challenges with foreclosures that other major cities | | | | these people would think it was just another |
| were. The city's tax base was eroding. Neighborhoods | | | | foreclosure notice and not open it. |
| were deteriorating because of vacant and abandoned | | | | The city officials did not want to risk this. So they |
| homes. | | | | recruited community organizations to have their |
| In early 2008 the city council held a hearing on | | | | representatives follow up with each person who had |
| foreclosures and the crisis it was causing for the city. | | | | been sent an order. One organization, ACORN, |
| Residents, representatives from various organizations | | | | reported its results. 91 of the 94 people their |
| and leaders of community groups testified at this | | | | representatives met with called or planned to call |
| hearing. This was followed by a meeting at a church in | | | | about the counseling. 61 called while the representative |
| late March. Individuals facing foreclosure, their | | | | was with them. Most of these used the |
| neighbors, representatives for the community groups | | | | representative's cell phone to make the call. |
| and members of the city council attended this. A plan | | | | Let's look at this more closely. People facing |
| was developed to stop Sheriff's sales of foreclosed | | | | foreclosure are very concerned about their situation. |
| properties. | | | | They're embarrassed. They don't like to tell others |
| The city council then passed a resolution calling for a | | | | what is happening to them. Most times they don't |
| stop of the Sheriff's sales and asking a judge to | | | | reach out for help until it is too late. |
| design a program to help people facing foreclosure | | | | Here the city had community organizations reach out |
| save their homes. The stoppage of the sheriff's sales | | | | to them. The representatives from these groups gave |
| caught the attention of the mortgage companies. They | | | | them support. They even had them call on their cell |
| sent representatives who met with city council | | | | phones. One main reason for the success of this |
| members, community organizations and housing | | | | program is the personal visits by these |
| counselors. Their talks led to the framework for the | | | | representatives. |
| pilot program. | | | | The next step was for the person facing foreclosure |
| In mid April the First Judicial District of Common Pleas | | | | to meet with the financial counselor. Most attended the |
| issued an order creating the Residential Mortgage | | | | meetings. |
| Foreclosure Diversion Pilot Program. A precedent had | | | | The last step was the conciliation conference. About |
| been set years earlier giving the court the power to do | | | | 80% of the people attended their conference. Here |
| this. | | | | again this is phenomenal. Many people would miss a |
| The order stated that a mandatory conciliation | | | | conference like this because of their fear that the |
| conference had to be held in all foreclosure cases | | | | outcome would not be positive for them. |
| where the property was owner occupied before the | | | | The high success rate in Philadelphia has to be due to |
| property could be sold at a sheriff's sale. Investment or | | | | two reasons. The first is the positive impression made |
| commercial properties were not subject to this order. | | | | at the initial contact by the representatives from the |
| This conciliation conference would be scheduled 30 to | | | | community organizations. The second is the hope the |
| 45 days after the mortgage company filed its | | | | people got from the financial counselors and the plan |
| complaint against the person holding the mortgage. The | | | | they put together for them. |
| person facing foreclosure and a representative from | | | | Other cities and states have adopted various types of |
| the mortgage company had to attend this conference. | | | | mediation programs to stop foreclosure. The success |
| A court order would be sent to the person facing | | | | rate of most has not been as great as the program in |
| foreclosure notifying them of the conference. It would | | | | Philadelphia. Connecticut and New York are two |
| also instruct them that they had to meet with a | | | | states that have programs. In Part 3 we will look at |
| counselor at a housing counseling agency. | | | | these and see what the Philadelphia program has that |
| The counselor would do a financial assessment and | | | | these are lacking. |