Philadelphia Pioneers Plan To Stall Foreclosure

Posted on August 1, 2008
Filed Under Foreclosure Homes | Leave a Comment

Philadelphia is pioneering a plan to stall foreclosure by pledging to renegotiate mortgage loans with borrowers facing foreclosures. By a plan a number of people who could not afford to make payments on their adjustable-rate sub prime mortgage, will be able to retain their homes if they so desired. Hailed as one of the best programs ever thought of by a city, it stated that a property that was on its way for a foreclosure sale by the local sheriff’s office had to be referred to officials who would act as an intermediary in trying to restructure the loan payment agreeable to both the lender and the borrower, and stall unnecessary foreclosure of the mortgage property.

Ian Phillips of the Acorn, a community advocacy group, who was associated in structuring the program, said that almost 1200 properties that were to be put up on foreclosure sales in April and May were postponed until July to allow time for negotiations as per the new plan. Of the 1200 properties, approximately 800 were owner-occupied.

Mayor Michael Nutter had made an urgent appeal to the borrowers to approach the city legal advisors and people as soon as they spied the dark cloud of foreclosure in the horizon and even before they received a notice of foreclosure from their lender. For the benefit of the people of Philadelphia, the city had invested $2 million to avail of the services of these advisors who were to counsel homeowners and solve problems of payment before they reached the foreclosure stage. At a news conference the Mayor added that, the foreclosure crisis was not restricted to Philadelphia city exclusively but had affected the whole nation.

Philadelphia had witnessed foreclosure filings rising 18% in 2007 from the previous year at 6237, which by the end of the year is expected to rise to 8500 according to official reports. In 2006, sub-prime loans on mortgages went up by 20%, and made to borrowers with minimum credit worthiness. As the initial low introductory rates of sub-prime loans expired, the borrowers were unable to comply with the higher mortgage payments, and thousands of house owners throughout the country were subjected to foreclosure notices. In the last quarter of 2007, according to the Mortgage Bankers Association, 7% of all mortgages were under adjustable sub-prime loan of which 42% were those in foreclosure, and the proportion of mortgage loans in foreclosure was 2.04%, a record in the city.

Borrowers have just begun to benefit from the plan.

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