Sends letter to Secretary Preston: other cities should follow Philly’s lead
WASHINGTON, DC – U.S. Senator Bob Casey (D-PA) today sent a letter to Steve Preston, Secretary of Housing and Urban Development (HUD), urging HUD to educate and inform other cities about Philadelphia’s successful Residential Mortgage Foreclosure Diversion Pilot Program. The program is designed to keep working families in their homes and combat preventable foreclosures by requiring face-to-face meetings between borrowers and lenders.
“Weathering the foreclosure crisis will take innovation and action from cities, counties, and states around the country,” wrote Senator Casey.
Senator Casey went on to write: “A program as successful and economical as Philadelphia’s should not be limited to a single city when homeowners across the country are suffering. I am writing you to initiate a discussion about what HUD can do to make other state and local governments aware of the Philadelphia program and provide the necessary guidance to assist them in implementing similar efforts.”
The program, developed in collaboration with the City of Philadelphia and the Philadelphia Court of Common Pleas, led by Mayor Michael Nutter and President Judge C. Darnell Jones, II. is designed to help homeowners keep their homes. Prior to the meeting between homeowners and lenders, homeowners must participate in a free counseling session to develop a proposed payment schedule to present to their mortgage company. Housing counselors and lawyers volunteer their services to the program and if the homeowner and lender cannot reach an agreement, they appear before a temporary judge - another lawyer volunteering his or her time and expertise.
According to the Philadelphia Inquirer, approximately 200 Philadelphia lawyers have donated their time to the program and out of 600 homeowners who were in danger of losing their homes, approximately 325 were able to avoid foreclosure and eviction.
Full text of the letter is below:
Dear Secretary Preston:
First, let me congratulate you once again on your confirmation as Secretary of the Department of Housing and Urban Development (HUD). I am looking forward to working with you over the next several months as we attempt to contain the foreclosure crisis.
The current housing crisis is the most pressing domestic issue of the day. It has significantly weakened our credit markets, erased billions of dollars in household wealth, and caused major damage to the wider economy. Congress, as you know, is currently considering legislation that will combat the crisis. However, no single piece of legislation can address what the Treasury Department estimates will be 2.5 million foreclosures in 2008. Federal action alone cannot salvage the housing market. Weathering the foreclosure crisis will take innovation and action from cities, counties, and states around the country.
Philadelphia is one city that has taken the lead in responding to the housing crisis in my home state of Pennsylvania. Foreclosures are soaring in Philadelphia, as they are across the country. According to the Philadelphia Inquirer, Philadelphia County reported 730 properties filed for foreclosure in April of this year, and Philadelphia’s foreclosures are projected to rise to 8,500 this year, up from 6,200 in 2007.
In response to this overwhelming increase, this spring the City of Philadelphia and the Philadelphia Court of Common Pleas began the Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program. The program is designed to keep working families in their homes and combat preventable foreclosures by requiring face-to-face meetings between borrowers and lenders. Simply put, an owner-occupied home cannot be sold at a sheriff's sale without the owner first getting an opportunity to take part in a "conciliation session" with lenders.
However, homeowners and lenders are not simply required to negotiate with the mere hope of a positive outcome. Instead, prior to the meeting, homeowners must participate in a free counseling session to develop a proposed payment schedule to present to their mortgage company. Housing counselors and lawyers volunteer their services to the program, and if the homeowner and lender cannot reach an agreement, they appear before a temporary judge - another lawyer volunteering his or her time and expertise.
Obviously, these efforts cannot keep all borrowers in their homes, but the program is garnering a remarkable response from housing advocates and the legal community, as well as enviable results in preventing foreclosure. So far this year, the Inquirer reports that approximately 200 Philadelphia lawyers have donated their time to the program, and out of 600 homeowners who were in danger of losing their homes, approximately 325 were able to avoid foreclosure and eviction.
In June, the Mortgage Bankers Association reported that nationwide over 1,000,000 homes have entered foreclosure proceedings, the highest rate ever recorded. The problem will only worsen as housing prices fall, unemployment rises, and the interest rates on adjustable-rate mortgages (ARMs) reset. So far, all the steps the federal government has taken have not stopped the foreclosure meltdown. H.R. 3221, while a remarkable bipartisan achievement, will not be a silver bullet either. To help homeowners, we must educate and inform cities about programs like Philadelphia’s.
The Philadelphia model has multiple advantages. First, lenders participate because it is not in their interest to be saddled with more foreclosed properties, particularly in this market. In addition, the program recognizes the obligation of borrowers to pay their debts and avoids a complete moratorium on foreclosures. Finally, since it is organized around voluntary mediation and donated expertise, it is relatively inexpensive, particularly when judged against the social and financial costs of yet more foreclosures. Other cities and municipalities could adopt similar programs at limited government expense.
While the cost is minimal, it is not nonexistent. The housing legislation currently being considered by the Congress would provide $150 million for housing counseling for families facing foreclosure. While there will no doubt be substantial demands on these resources to support a variety of programs, I think they could be put to particularly good use by encouraging cities around the country to use at least a portion of the funds to establish programs like that in Philadelphia. Already, cities as diverse as Houston, Chicago, and New York have expressed interest in the Philadelphia plan. I want to take this opportunity to commend Judge C. Darnell Jones, II, President Judge of the Philadelphia Court of Common Pleas for his tireless efforts in implementing the program. Mayor Michael Nutter has also been steadfastly dedicated to containing the foreclosure crisis, committing $1 million to the court’s pilot program in an effort to save Philadelphia families from the loss of their homes.
A program as successful and economical as Philadelphia’s should not be limited to a single city when homeowners across the country are suffering. I am writing you to initiate a discussion about what HUD can do to make other state and local governments aware of the Philadelphia program and provide the necessary guidance to assist them in implementing similar efforts. The Department has the resources and the expertise to educate other cities about best practices like the Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program. If there are other funding sources that can be made available for foreclosure prevention programs, or mechanisms to empower state and local governments to effectively fight the rising wave of foreclosures, I respectfully request that the Department proactively inform state and local governments suffering from widespread foreclosures of the Philadelphia program’s existence and the resources available to cities seeking to replicate it.
Please do not hesitate to contact my office if there is anything I can do to assist the Department. I look forward to working with you on our shared goal of alleviating the effects of the housing crisis on American working families.
Sincerely,
Robert P. Casey
United States Senator
Cc: Secretary Henry Paulson
###
“Weathering the foreclosure crisis will take innovation and action from cities, counties, and states around the country,” wrote Senator Casey.
Senator Casey went on to write: “A program as successful and economical as Philadelphia’s should not be limited to a single city when homeowners across the country are suffering. I am writing you to initiate a discussion about what HUD can do to make other state and local governments aware of the Philadelphia program and provide the necessary guidance to assist them in implementing similar efforts.”
The program, developed in collaboration with the City of Philadelphia and the Philadelphia Court of Common Pleas, led by Mayor Michael Nutter and President Judge C. Darnell Jones, II. is designed to help homeowners keep their homes. Prior to the meeting between homeowners and lenders, homeowners must participate in a free counseling session to develop a proposed payment schedule to present to their mortgage company. Housing counselors and lawyers volunteer their services to the program and if the homeowner and lender cannot reach an agreement, they appear before a temporary judge - another lawyer volunteering his or her time and expertise.
According to the Philadelphia Inquirer, approximately 200 Philadelphia lawyers have donated their time to the program and out of 600 homeowners who were in danger of losing their homes, approximately 325 were able to avoid foreclosure and eviction.
Full text of the letter is below:
Dear Secretary Preston:
First, let me congratulate you once again on your confirmation as Secretary of the Department of Housing and Urban Development (HUD). I am looking forward to working with you over the next several months as we attempt to contain the foreclosure crisis.
The current housing crisis is the most pressing domestic issue of the day. It has significantly weakened our credit markets, erased billions of dollars in household wealth, and caused major damage to the wider economy. Congress, as you know, is currently considering legislation that will combat the crisis. However, no single piece of legislation can address what the Treasury Department estimates will be 2.5 million foreclosures in 2008. Federal action alone cannot salvage the housing market. Weathering the foreclosure crisis will take innovation and action from cities, counties, and states around the country.
Philadelphia is one city that has taken the lead in responding to the housing crisis in my home state of Pennsylvania. Foreclosures are soaring in Philadelphia, as they are across the country. According to the Philadelphia Inquirer, Philadelphia County reported 730 properties filed for foreclosure in April of this year, and Philadelphia’s foreclosures are projected to rise to 8,500 this year, up from 6,200 in 2007.
In response to this overwhelming increase, this spring the City of Philadelphia and the Philadelphia Court of Common Pleas began the Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program. The program is designed to keep working families in their homes and combat preventable foreclosures by requiring face-to-face meetings between borrowers and lenders. Simply put, an owner-occupied home cannot be sold at a sheriff's sale without the owner first getting an opportunity to take part in a "conciliation session" with lenders.
However, homeowners and lenders are not simply required to negotiate with the mere hope of a positive outcome. Instead, prior to the meeting, homeowners must participate in a free counseling session to develop a proposed payment schedule to present to their mortgage company. Housing counselors and lawyers volunteer their services to the program, and if the homeowner and lender cannot reach an agreement, they appear before a temporary judge - another lawyer volunteering his or her time and expertise.
Obviously, these efforts cannot keep all borrowers in their homes, but the program is garnering a remarkable response from housing advocates and the legal community, as well as enviable results in preventing foreclosure. So far this year, the Inquirer reports that approximately 200 Philadelphia lawyers have donated their time to the program, and out of 600 homeowners who were in danger of losing their homes, approximately 325 were able to avoid foreclosure and eviction.
In June, the Mortgage Bankers Association reported that nationwide over 1,000,000 homes have entered foreclosure proceedings, the highest rate ever recorded. The problem will only worsen as housing prices fall, unemployment rises, and the interest rates on adjustable-rate mortgages (ARMs) reset. So far, all the steps the federal government has taken have not stopped the foreclosure meltdown. H.R. 3221, while a remarkable bipartisan achievement, will not be a silver bullet either. To help homeowners, we must educate and inform cities about programs like Philadelphia’s.
The Philadelphia model has multiple advantages. First, lenders participate because it is not in their interest to be saddled with more foreclosed properties, particularly in this market. In addition, the program recognizes the obligation of borrowers to pay their debts and avoids a complete moratorium on foreclosures. Finally, since it is organized around voluntary mediation and donated expertise, it is relatively inexpensive, particularly when judged against the social and financial costs of yet more foreclosures. Other cities and municipalities could adopt similar programs at limited government expense.
While the cost is minimal, it is not nonexistent. The housing legislation currently being considered by the Congress would provide $150 million for housing counseling for families facing foreclosure. While there will no doubt be substantial demands on these resources to support a variety of programs, I think they could be put to particularly good use by encouraging cities around the country to use at least a portion of the funds to establish programs like that in Philadelphia. Already, cities as diverse as Houston, Chicago, and New York have expressed interest in the Philadelphia plan. I want to take this opportunity to commend Judge C. Darnell Jones, II, President Judge of the Philadelphia Court of Common Pleas for his tireless efforts in implementing the program. Mayor Michael Nutter has also been steadfastly dedicated to containing the foreclosure crisis, committing $1 million to the court’s pilot program in an effort to save Philadelphia families from the loss of their homes.
A program as successful and economical as Philadelphia’s should not be limited to a single city when homeowners across the country are suffering. I am writing you to initiate a discussion about what HUD can do to make other state and local governments aware of the Philadelphia program and provide the necessary guidance to assist them in implementing similar efforts. The Department has the resources and the expertise to educate other cities about best practices like the Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program. If there are other funding sources that can be made available for foreclosure prevention programs, or mechanisms to empower state and local governments to effectively fight the rising wave of foreclosures, I respectfully request that the Department proactively inform state and local governments suffering from widespread foreclosures of the Philadelphia program’s existence and the resources available to cities seeking to replicate it.
Please do not hesitate to contact my office if there is anything I can do to assist the Department. I look forward to working with you on our shared goal of alleviating the effects of the housing crisis on American working families.
Sincerely,
Robert P. Casey
United States Senator
Cc: Secretary Henry Paulson
###
