Developing a System to Head Off Wide Spread Subprime Mortgage Foreclosures in Philadelphia

We need an agreement from lenders holding subprime loans to do loan modifications at a scale sufficient to head off large scale foreclosures for Philadelphia homeowners and neighborhoods.  With the volume of subprime loans on the books in this city, we believe that lenders and servicers will need help to prevent these foreclosures and the accompanying losses they will cause.

• We ask that servicers agree to use the city of Philadelphia’s extensive network of housing counseling agencies to do work outs for Philadelphia homeowners.
• These agencies would put together sufficient information to determine what a workable modification or other work out would be to resolve a delinquent mortgage without loss of the home.  This would allow servicers to handle the volume of resets and defaults coming out of the subprime mortgage crisis which hurts lenders, borrowers and communities.
• We would agree on a standard format to forward information to servicers from homeowners and servicers would agree to offer affordable workouts as computed by the counseling agencies.
• Counseling agency staffs would be trained to implement the system.
• We would have to work out agreeable criteria for affordable workouts and servicers could spot check forms submitted to check for improper submissions from the counseling agencies. 
• Foreclosure actions would stop while work outs are in process
• Until such an agreement can be negotiated the city should institute a moratorium on Sheriff’s Sales to protect homeowners and property values in our neighborhoods. 

Without this public private partnership we think that large numbers of homes will be lost to foreclosure devastating families and leading to large scale abandonment of properties in many Philadelphia neighborhoods, to say nothing of losses to lenders and investors.  Servicers will not be able to keep up with the numbers of loan modifications and workouts needed in the next few years in Philadelphia.

Philadelphia Foreclosure Crisis Committee
Philadelphia Unemployment Project
ACORN
Community Legal Services
Philadelphia Legal Assistance