Although Congress and the Obama administration have taken important steps to revitalize the housing industry and the economy, they have not helped cities and states in one important area: preventing foreclosures.

The economic-stimulus legislation passed last month authorizes an additional $2 billion for the Neighborhood Stabilization Program. First established by stimulus legislation last year, the stabilization program provides funds to states and municipalities for the purchase, redevelopment, and resale of abandoned and foreclosed homes. Unfortunately, though, states and cities with expansive programs to prevent foreclosures - such as Pennsylvania and Philadelphia - are not permitted to use the funds for those efforts.

Pennsylvania and Philadelphia have been at the cutting edge of preventing foreclosures during the housing downturn. Pennsylvania law requires a delay in the foreclosure process of at least 30 days so delinquent homeowners can apply for loan assistance under the state's Homeowners' Emergency Mortgage Assistance Program. At an average cost of less than $11,000 per family, the program provides loans to homeowners at risk of losing their homes through no fault of their own.

Since its inception in the 1980s, the program has enabled more than 41,000 families to stay in their homes. In 2007, Harvard's Kennedy School of Government named it one of the top government programs in the United States. And in a report last year, the Pew Charitable Trusts described it as an "exemplary model" that inspired other states to launch similar programs.

In Philadelphia, the Foreclosure Prevention Program requires court-sanctioned negotiations between lenders and delinquent borrowers. This innovative new program preserves the rights of lenders and allows borrowers to stay in their homes while attempting to refinance or obtain mortgage assistance.

Every month, city outreach workers knock on the doors of homeowners who are in danger of foreclosure. They urge them to call a free city hotline (215-334-HOME) to talk to a housing counselor. The counselors prepare borrowers for court hearings and work with them to get their mortgages renegotiated.

In some cases, the loan is too far gone. But in many cases, it's not. Since last spring, Philadelphia's program has kept more than 600 homeowners from losing their homes. It has gotten national media attention, and Mayor Nutter shared information about it with President Obama during a meeting in January. Inspired by Philadelphia's example, Allegheny County recently implemented its own Mortgage Conciliation Program.

Many more homes could be saved if Pennsylvania's share of neighborhood-stabilization funds were available to fund more emergency loans by the state or more of the city's efforts to prevent foreclosures. The problem is that the law doesn't permit funds to be expended until the foreclosure process has been completed. But by then, it's too late; the borrower has already lost his or her home.

This should be changed. It's not fair to penalize states and cities such as Pennsylvania and Philadelphia for their success at slowing the foreclosure process. By denying them the ability to use funds where the need is greatest, the federal government is ignoring successful strategies in favor of one that doesn't address our needs.

In February, Obama outlined a plan designed to help Americans avoid foreclosure by refinancing their existing mortgages or renegotiating monthly payments. In the same vein, it would make sense for the Department of Housing and Urban Development to align the Neighborhood Stabilization Program with successful foreclosure-prevention programs at the local and state levels. Members of Pennsylvania's congressional delegation should work with HUD toward a legislative solution that allows the federal funds to be used to preserve homeownership.

Mark Schwartz and Terry Gillen are the executive directors of, respectively, Regional Housing Legal Services and the Phila. Redevelopment Authority