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Residential Mortgage Foreclosure Diversion Program
The City of Philadelphia’s Mortgage Foreclosure Prevention program is an innovative initiative that helps families facing the loss of their homes through foreclosure. The program was initiated in April 2008 by the Philadelphia Court of Common Pleas and local housing advocates, with critical support from the City of Philadelphia and the County Sheriff’s Office.
The program works by postponing Sheriff sales for all owner-occupied residences until the homeowner has had an opportunity to meet with a housing counselor and explore viable alternatives to foreclosure. This program has already prevented evictions and kept many Philadelphia homeowners in their homes.
How the three-part Mortgage Foreclosure Prevention Program works:
1. Courtroom Meetings
The Conciliation Conference is a special court hearing where proposals to cure the mortgage default are presented to the lender’s attorney and a judge pro tem. The homeowner is represented by a housing counselor and if available a pro-bono attorney. In many cases, lenders may agree to loan modifications or the mortgage may be purchased and restructured under the Homeowners’ Equity Recovery Opportunity (HERO) Loan Program.
2. Door–to–Door Outreach
The outreach program was added by the City to raise homeowner awareness of the program. Although every homeowner eligible for the program receives an official notice from the courts, families facing the crisis of foreclosure may become overwhelmed or discouraged, and begin to disregard their mail. The outreach workers go door-to-door to program-eligible properties. They leave informational flyers and urge the homeowners to call the SaveYourHomePhilly hotline to access housing counseling resources. Since May 2008, outreach teams have knocked on more than 2,400 doors.
3. SaveYourHomePhilly Hotline and Counseling
The City of Philadelphia provides funding for a hotline that is staffed by lawyers and paralegals at Philadelphia Legal Assistance. The SaveYourHomePhilly Hotline number is
215-334-HOME. The hotline provides the homeowner with additional information about the Foreclosure Prevention Program, and schedules the initial meeting between the homeowner and the housing counselor. Homeowners are given the option of meeting with a housing counseling agency near their place of work or their place of residence. The housing counselors collect and review the homeowner’s financial and loan documentation, and begin negotiating with the lender in preparation for the Conciliation Conference.
The Residential Mortgage Foreclosure Diversion Program
has resulted in dozens of success stories, such as:
- “Sam,” who was contacted through the door-to-door outreach program. His loan was modified to include a lowered interest rate from 12% to 9.6%. His new payment will be $548 a month.
- “Mary” met with the lender in conciliation meetings and her payments went from 9.9% to 5.5%. Her monthly payment was reduced from $1,479 to $1,124.
- “Mrs. Clark,” who is elderly, became delinquent on a home repair loan after an illness. Her mortgage company would not accept the payment agreement terms initially suggested but a forbearance agreement was finalized at the Conciliation Conference.
Program Effectiveness
Calls to the SaveYourHomePhilly Hotline have more than tripled since the program’s inception, from 150 in the first month to 598 in October 2008. This increase is due to a combination of informational news conferences by Philadelphia Mayor Michael Nutter and neighborhood outreach efforts.
- As of December 2008, outreach workers had made more than 3,000 visits to 2,400 properties.
- Homeowner involvement in the program was 73 percent for those who had direct encounters with an outreach team versus 48 percent for those who did not.
- Early estimates suggest that outreach efforts may lead to an overall participation increase of 12 percent.
- Of the 2,331 households who have participated in a Conciliation Conference, 2,270 have averted foreclosure: 603 Resolved with the lender (stayed or ended agreement) 244 Averted by bankruptcy 1,423 Still in housing counseling.
For more information, please email Terry Gillen or call her at 215-209-8720.
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