Study Finds Philadelphia Anti-Foreclosure Program Very Successful At Keeping Homeowners In Their Homes
"Study Finds Philadelphia Anti-Foreclosure Program Very Successful At Keeping Homeowners In Their Homes"
In response to a widespread foreclosure crisis, Philadelphia instituted what’s known as a mortgage mediation program. Under the program, banks are required to meet face-to-face with a borrower before foreclosing, to attempt to come to an agreement that would keep the borrower out of foreclosure. There is no requirement that the two sides come to an agreement, only that they meet.
Mediation programs have proven successful all across the country in keeping borrowers from losing their homes, and Philadelphia’s is no exception. According to a report from Ira Goldstein of The Reinvestment Fund, nearly 70 percent of borrowers eligible for meeting with their banks participate and about 85 percent of those who strike a deal with their lender are still in their homes 18 months later:
In 2007, the year before the program began, 27 percent of homeowners in foreclosure lost their homes. That fell to 14.5 percent in the six months after the program began, then to 5.7 percent thereafter, Goldstein found. In the first year of the program, 5,000 homeowners took advantage of it, according to data released in June 2009. Of agreements reached through June 2009, 733, or 84.6 percent of 866 homeowners, remained in their homes 18 months later.
“The success is we set the table. And we require the guests to come to the table,” said Judge Annette Rizzo, who set up the program. “Once you get that one-on-one, where the case’s facts come to light, that’s when individual deals come.”
Programs like this one, as we’ve noted before, could be key to combating the housing crisis, which has continued unabated for years. New data shows that housing prices have suffered a larger plunge in the last few years than they did during the Great Depression, while federal anti-foreclosure programs have fallen flat due to bank intransigence.