Reuters On The Philadelphia Plan For Reducing Foreclosures

In Philadelphia, Pennsylvania, Reuters reports:

• With the U.S. financial system in crisis due to surging mortgage defaults, a Philadelphia program designed to reduce foreclosure sales may provide a national model to keep people in their homes. The program, based not on bailouts but reconciliation between borrowers and lenders, has been able to prevent at least temporarily the disposal of many of the properties in its purview. The first such city-sponsored plan in the United States, it has also saved banks money because it is cheaper to renegotiate than foreclose.

• Launched by city government and the Philadelphia Court of Common Pleas in June, the plan requires owner-occupied properties scheduled for sheriff's sale to be submitted to a conciliation conference of borrowers, lenders and the court before they can be sold.

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• Mike McKeever, an attorney who represents lenders in the Philadelphia program, said banks have cooperated because restructuring a loan or forgiving some arrears is cheaper than foreclosure. "We are in favor of it," McKeever said. "It has brought both parties to the table." Mayor [Michael] Nutter said the program is protecting neighborhoods from falling property values, which typically happens when a house is abandoned. The city provided $2 million for the program and will provide more next year, he said.

For the story, see Philadelphia pilot is model in U.S. housing crisis.

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