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Philadelphia’s Approach to Foreclosure Preventions Policy Evaluation

May 8 details how Philadelphia’s foreclosure prevention model begun in 2008 has worked, how it can be replicated in other cities, and how it can be improved to better serve at-risk homeowners.

Philadelphia was one of the first jurisdictions in the country to adopt a new foreclosure prevention approach to deal with unprecedented levels of foreclosures. With 70% participation rates, fueled by door to door outreach and a hotline, Philadelphia successfully connected at-risk homeowners to a bridge loan program offered by the State, a mandatory Diversion program that required in person negotiations between the homeowner and the lender/servicer, and other available resources.

The approach, with housing counselors playing the central role, met with great success helping over 11,000 homeowners in its first three years at a rough cost of $750 per household. The approach is described in great detail.

In addition, eight priority recommendations are outlined to improve the current model. Many address the need for quality training and performance standards to eliminate significant variation in the advice and level of assistance that different housing counselors provide to similar at-risk homeowners. Other recommendations address the need to provide alternative paths to assist homeowners for whom loan modifications and small bridge loans may not provide a sustainable solution. With a majority of Philadelphia homeowners at relatively low income levels and one in nine foreclosures caused in part by medical costs, one recommendation offers additional tools that can better serve the needs of key populations. Another key recommendation seeks to encourage the independently run Sheriff’s Office in Philadelphia—responsible for selling foreclosed properties at sheriff’s sale—to cooperate with the courts and other agencies on issues that impact foreclosure, rather than impeding their efforts as it has for the past three years. Finally, there are several recommendations to inject greater transparency, consistency, and accountability into Philadelphia’s foreclosure-prevention efforts.