Philadelphia's Foreclosure Prevention Program Is Mandatory For Banks -- Unlike Obama's Making Home Affordable

Reuters reports today that the Mortgage Foreclosure Diversion Pilot Program in Philadelphia has saved almost 60 percent of participants from foreclosure -- 2,776 out of 4,690 from June 2008 to May 2009.

At the Philadelphia City Hall celebration for the program's one year anniversary, State Supreme Court Chief Justice Ronald Castille said, "Even if you saved just one house, that would have made this program a success."

The 1.2 million families across the US who have been displaced by foreclosure in 2009 alone might beg to differ.

The Philadelphia Foreclosure Diversion Pilot Program makes it mandatory for lenders to refer all foreclosure cases to the program. Judges, housing advocates and attorneys mediate the process which, in the end, benefits both homeowners and banks: struggling homeowners are able to stay in their homes, and lenders won't end up having to sell the repossessed properties for less than they're worth.

Nationally, foreclosures are at a record high -- there are new 6,600 foreclosures every day, or one every 13 seconds. Stopping this downward spiral is key to shoring up the economy. Obama's Making Home Affordable program, launched in February 2009, aims to help 7 to 9 million homeowners stay in their homes through refinancing and loan modification. So far, the Department of the Treasury estimates that 50,000 loans have been modified -- but many homeowners, even those who eventually received loan modifications, have faced an administrative nightmare, citing lost paperwork and delays.

The difference between the Philadelphia program and Obama's Making Home Affordable program is that the Philadelphia program makes it mandatory for lenders to negotiate with homeowners. Under the Obama program, it's still voluntary.

HuffPost's Eyes & Ears is collecting foreclosure stories for our Dispatches on the Displaced series. We've highlighted stories from homeowners who are going through foreclosure, and those pursuing foreclosure alternatives such as short sale, a deed in lieu and loan modification.

We'd like to hear firsthand from anyone who's had an experience with the Philadelphia Foreclosure Diversion Pilot Program -- whether you were among that lucky 60% whose mortgage was modified, or if you didn't receive a modification. Contact us at [e-mail].

And we're still collecting stories from homeowners outside of Philly, so send your foreclosure stories to [e-mail]. And sign up here to receive further updates about our foreclosure project.

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Comments

[vandegrasse]

It's for sure the federal government along with their business pals causes the problems and the states and the cities must actually deal with them. It used to be the other way around.

[jtjsrch]

PA seems to have it's act together. Years ago, a friend of mine, who was from Pittsburg, told me an interesting story. The state had enacted a law against pollution in the Allegheny River. The state would help businesses with the costs of "Cleaning up their act" to put in filters etc into any discharges into the river. After a few years of this, the river again had fish in it and was deemed ok to swim in. THEN there was a sudden pollution alert. Seems one company decided it would just go ahead and dump without filtration. The state went in, closed down the business, told the workers to go apply for unemployment insurance AND told the owners that they would NEVER be able to operate in PA again. "But what will we do" stated the owners?". The state said "Sell the property and get in the unemployment line, but you will NEVER be allowed to operate a business in this state ever again". Needless-to-say, there was a great deal of business for those specializing in environmental clean-up in that area thereafter! So I think what PA is doing for home-owners is the right thing to do. AND it will be better for the banks in the long run. What is wrong with that?

[rogerthat21]

there is no recovery yet

good political & economic articles: http://iamned.blogspot.com

[TrueSense]

Inspitte of his rhetoric that shows he knows better, Obama is hypnotized by Wall Street. Goldman is getting their moneys worth. Obama did not come out for anything mandatory because that might actually make Wall ST. do something and share in the pain. That is for government and individuals, not Wall St.

Instead, he wants there to be incentives to bring Wall St. to the table. Some of the incentives are public funds for them to come to the table.

[delta7777]

.
why does mandatory negotiation have to wait until after loan is delinquent,
foreclosure proceedings have started, and the lender is holding all the cards???
.

[dcrinaz]

Gee! This is a form of cramdown! Essentially banks are being put in a position in which they are legally required to change the terms of primary home mortgages so that homeowners can make realistic payments, homes can be kept out of the market and housing prices can stabilize. We could have had a similar cramdown made law nationwide in April except that all the Republicans in the Senate along with 12 traitor Democrats betrayed homeowners in favor of the banks by killing the bankruptcy reform that essentially would have done what this Philadelphia program is doing.

We know why the sell-out senators killed bankruptcy reform with cramdown; because the banks didn't want it any more than they want this Philadelphia program. But obviously the People run the government in Philadelphia much more than the People run the bank-owned U.S. Senate.

This proves that the banks and the sell-out senators were wrong about bankruptcy reform with cramdown. It also shows that President Obama was wrong to not support these needed reforms. I think our president is not getting the best financial advice. He should listen to Krugman and others more.

[M1]

Philadelphia is setting a great example. I hope more states follow....­like California and Nevada.

[fairandjust]

Good for Philly. Not available all over PA - because PA has a Repug-led State Senate. Nothing beneficial to consumers ever passes there.

[TJCole]

These are very rare people for the most part are on their own 300-000-400,000 are being foreclosed and evicted each month...

[ConservativeHippie]

Local, I like the sound of that. It's time to take our country back from the mega-corporations, one community at a time. Support local economies any way you can. The answers to our problems are closer to home than we are led to believe.

[WIpatriot]

This does seem to have a lot of merit...st­ay tuned...an­d support your local credit union.

[glockman]

Gasp! Local government doing a better job than the almighty federal govt.?

[mitchieone]

Like everything in government: Local = Good. Federal = Bad. The federal government is too large, wasteful and detached.

[fleaba]

I wish I lived in Philly.

[totaldisbelief]

Clearly it's up to the citizens to work locally to cure the many problems and work to strengthen our communities.
Communities and extended families will be the base for revitalizing our lives and economies.
Our money that goes to Washington seems to disappear down the rabbit/rat hole.

[swisskabab]

Obama had a plan to help homewners from foreclosure ????

I do know he garnered political capital under this plan and ended up funneling money to Wall St.

I regret supporting Obama, never voted Republican, and am sure Obama will do the odd small thing or two eventually to help the American citizen.