Philadelphia Foreclosures Clipped by Public-Private Action

by Simon Lindsay on cities

The rate of Philadelphia foreclosures is not as high as in most other large metro areas because of the relatively high number of private and public groups cooperating to prevent foreclosures in the area.

Among the numerous foreclosure prevention strategies launched by the city, nonprofits and activist organizations are the mandatory court-supervised mediation program between lenders and borrowers, the Homeowners Emergency Mortgage Assistance Program, the network of legal assistance providers under the Southeastern Pennsylvania Legal Service Programs and grassroots housing organizations.

Under the mandatory mediation program, a presiding judge supervises meetings among troubled homeowners, their lawyers and bank lawyers and requires the parties to craft a deal that would save homes from foreclosure.

Although all mediations do not result in positive results, the program has been succeeding in saving many homes. Since June when the program was launched by Judge Annette Rizzo to address the rising problem of Philadelphia foreclosures, more than 700 repayment schemes have been forged out of around 3,600 mediation meetings held.

Because of the success of the program, the state of New Jersey and five other cities have been working to duplicate the program in their jurisdictions.

Another proof of the high level of cooperation between private and public groups in the city is the record $44 million received by the city this year from the Neighborhood Stabilization Program. The allocation was even more significant in light of the reality that many other foreclosure-ridden cities and states did not receive any NSP money during the second funding round, such as Las Vegas and Indianapolis.

According to the Housing and Urban Development Department, the city of Philadelphia submitted a strong application in which it described how it will buy foreclosure homes for sale and use them as a springboard for job creation, affordable housing development and home ownership.

The city described four strategies in its proposal: homebuyer incentives, purchase and renovation, supplementary financing for affordable construction and selective demolition.

Another unique program launched to prevent foreclosures in Pennsylvania is the HEMAP. This program, available only in Pennsylvania, enables distressed homeowners to make current their mortgage accounts by providing them with subsidized loans.

Qualified homeowners can receive financial assistance for their mortgage payments for up to 24 months starting from the default date or up to $60,000 in total loans.

In addition to these government programs, a number of legal aid groups across the Pennsylvania have also allocated resources to help cut down Philadelphia foreclosures.

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