By Amaris Elliott-Engel
Of the Legal Staff
A majority of homeowners who participated in Philadelphia's mortgage foreclosure diversion program and who struck an agreement with their lenders have been able to remain in their homes, according to an independent community development financial institution.
The Philadelphia Common Pleas Court Residential Mortgage Foreclosure Diversion Program, which recently marked its third year in existence, has helped 85 percent of participants who were able to reach agreements with lenders, said the study released by TRF today.
The study was silent on the statistical significance of the 85 percent figure. However, TRF also found that 30 percent of those homeowners have seen subsequent foreclosure filings, even though they have not been forced out of their homes.
Philadelphia has an estimated 8,000 foreclosures every year since 2008, and 60 to 70 percent of them qualify for the diversion program, according to the report. Of the foreclosures that qualify, about 70 percent, or up to 3,920 the homeowners participate. Of the participating homeowners, one-third, or under a little over 1,300, reach an agreement with their mortgage lender or servicer. A little over 1,100 stay in their homes, but a little over 330 of those have a second mortgage foreclosure.
Court officials also say that, of those homeowners who do not strike an agreement to stay in their homes, the program allows for a "graceful," or more orderly exit from homes that will eventually end up in sheriff's sales, the report said.
According to the report, released today by community development financial institution TRF, 50 percent of homeowners who did not use the program are no longer in their homes. The number of sheriff's sales has declined from 27.2 percent to 5.7 percent, the report said. Nearly 16,000 cases have gone through the program since it began in the spring of 2008.
The program requires that the parties in mortgage foreclosure actions have a conciliation conference to try to settle the mortgage delinquency before sheriff’s sales occur.
A little over 30 percent of homeowners fail to appear for their conferences, the report said.
Despite the city's history as a "residentially segregated city along racial, ethnic and economic dimensions," the program is not showing a difference in outcomes for any demographic group in the city, except that whites who are not Hispanic are “slightly less likely to access the program,” the report said.
The report did not examine "whether justice for homeowners (and lender/services) is achieved through the diversion program," including whether homeowners' defenses to foreclosure are being pursued, if homeowners have a voice in the conciliation conferences and if lenders/servicers are being delayed in exercising their rights to reclaim collateral property.
Across the country, "about six million homes have gone into foreclosure since 2007, and another 12 million are expected to face foreclosure over the next five years," the report said.
Philadelphia Common Pleas Court Judge Annette M. Rizzo presides over the program.