Residential Foreclosures Hit a Snag in Philadelphia

by on cities

A number of residential foreclosures were put on hold in Philadelphia, Pennsylvania, as a sheriff's sales moratorium was put in place in the metro area. However, some banks have complained that it also prevented them from foreclosing on a number of developers that have failed to pay their loans.

One of the banks that filed a complaint against the order to put on hold the processing of foreclosed homes for sale in Philadelphia was New Century Bank. The bank asserted that the order to postpone sheriff's sales in all parts of the city until April was improperly done. The moratorium was put in place as Philadelphia tries to get its foreclosure program in order, which suffered a setback when over $50 million of the program's money reportedly disappeared.

New Century's complaint stated that it was not only Pennsylvania foreclosed homes for sale processes that have been put on hold, but also foreclosures involving real estate developers. The bank was trying to get $5.5 million owed to it by developer Tower Apartments Partnership to finance a condominium building in Germantown. Work on the 32-unit property was stalled.

The condo building was supposedly sold last February 1 at a sheriff's sale, along with other residential foreclosures in the city. However, the moratorium prevented the sale of the property, along with numerous house foreclosures. Lawyers for New Century have requested the Pennsylvania Supreme Court to allow business foreclosures to proceed and exempt them from the moratorium.

They also argued that the Common Pleas court, which issued the order, had no authority to order a delay in commercial properties' sheriff sales. The moratorium, according to some housing market observers, also put on hold transactions involving people planning to buy bank foreclosed homes. Home sellers affected by the order are hoping that procedures will be allowed to continue soon.

Residential foreclosures and sheriff sales should resume by April of this year, but some market observers stated that it could be delayed further, depending on how fast city officials are able to sort out the problem. Authorities are reportedly trying to trace where the foreclosure program money went.