Philadelphia will not impose a moratorium on foreclosure sales, but it will slow the legal process to try to help borrowers avoid the loss of their homes, Common Pleas Court President Judge C. Darnell Jones II said yesterday.

Recognizing that anything longer than Sheriff John D. Green's current one-month stay of foreclosure sales would not withstand a legal challenge, Jones announced to City Council a novel plan for a court-supervised process exclusively for owner-occupied properties.

The plan would still allow commercial, rental and investment properties to move through the normal foreclosure process, culminating with a sheriff's sale of the foreclosed property if no deal is worked out with the bank. But homeowners would be diverted to a separate track that would give them access to free legal advice and housing counseling, Jones said.

"We believe what we're coming up with as an alternative is a much wiser way to deal with this" than a moratorium, Jones said. He said he hoped to issue an administrative order Monday establishing the plan.

The plan was worked out by representatives from the lending community, housing advocates, the city, and social-service agencies who have been meeting since 2004 in a court-engendered steering committee. The committee was moved to action by City Council's March 27 resolution calling for a moratorium, and Green's announcement the same day that he would cancel April sales and seek a longer stay.

Banks had cautioned that a moratorium would drive lenders out of the market, raising mortgage rates and making loans more difficult to get.

The mortgage industry and housing advocates praised Jones' announcement as way to allow banks a process to collect on their valid loans while forcing them to the table on a schedule supervised by the court.

Michael T. McKeever of Goldbeck, McCafferty & McKeever, a Philadelphia law firm that represents lenders in foreclosure proceedings, said he was glad the court was being proactive.

"We welcome any court action that would encourage borrowers to take responsibility and make proposals to resolve their loan delinquencies, so long as the foreclosure process is not unduly delayed, especially in cases where it's not warranted for delays to occur, such as vacant properties or investor properties," said McKeever, who sits on the committee.

Green's deputies were going through every property on the list of sheriff's sales for April and May to determine which are owner-occupied. In one case, an investor bought 10 properties, took out all the equity in the buildings, and went into foreclosure. "There is an example of someone we're not concerned about," Green said.

Alan Kaplinsky, senior partner and chair of the consumer financial services group at Ballard, Spahr, Andrews & Ingersoll, said any lender faced with a legitimate defense from a homeowner - including victims of predatory loan practices - would try to modify the loan.

"I think he absolutely did the right thing here," said Kaplinsky, whose firm represents lenders.

McKeever said the group was beginning discussions on how to set up a process that would get borrowers into housing counseling and mediation with lenders long before a sheriff's sale is scheduled.

Even then, "the success of that process really depends on an agreement by mortgage servicers to modify unaffordable subprime loans," said Beth Goodell, a senior lawyer with Community Legal Services.

The foreclosure crisis that has ravaged parts of the country has yet to hit Philadelphia - 469 properties were listed for sheriff's sales in February vs. 598 in February 2007. And the 2,041 homes the Sheriff's Office sold last year was a 7 percent decrease from 2006.

But more than 3,200 "high-cost" loans issued in 2006 will go into foreclosure this year as two-year "teaser" rates expire and homeowners' interest rates shoot up, they predict.

Some question whether there is a crisis to be dealt with here. But Green has said for years the foreclosure process is broken and he wants a better one.

Judge Annette M. Rizzo, who established the steering committee in 2004 when she presided over a Green petition to stay foreclosures, agreed.

"A moratorium just causes a freeze - and then what?" Rizzo said yesterday. "We just look at each other."

Rizzo said the plan would depend on getting lawyers to provide pro bono services for homeowners.