Posted on Sat, Sep. 30, 2006
MBIA agrees to plan to avert foreclosures
By Joseph N. DiStefano
Inquirer Staff Writer
MBIA Corp., a New York bond insurer, has agreed to ease payment terms for low-income Philadelphia homeowners whose properties face foreclosure because of tax bills more than nine years old.
MBIA had won the right to foreclose on the properties when the Philadelphia Authority for Industrial Development defaulted two years ago on a $75 million bond issue backed by uncollected city property taxes from 1997 and earlier.
Initially, MBIA demanded immediate payment, and threatened to foreclose on the homes and evict owners if the company weren't paid.
But Drew Aldinger, a lawyer who represents MBIA in Philadelphia, said MBIA agreed this week to adopt the same, more lenient payment standards the city agreed last year to impose on more recent tax delinquents in order to slow the rate of foreclosures in the city.
Under the city's program, low-income homeowners could keep the homes they live in if they agreed to pay as little as 5 percent of their income to MBIA each month, while also paying current taxes to the city. The exact terms would depend on the family's income and size, and the amount of its tax debt.
MBIA had said it was willing to change its terms last winter, after the Philadelphia Unemployment Project and other groups picketed the city's monthly tax-lien sale in West Philadelphia.
Protesters included several families that said they had not been aware of the tax debts when they purchased the properties, many of which are in rundown sections of North and West Philadelphia.
But before adopting the city's easier terms, MBIA wanted the City Solicitor's Office to explain its program in detail, and that took time, said Montgomery L. Wilson, a lawyer for Community Legal Services of Philadelphia, who negotiated the deal with Aldinger.
It wasn't immediately clear how many homeowners could benefit from MBIA's new policy. The bond issue at one time covered more than 30,000 city properties, according to bankers and lawyers who have worked on the case. But some of the properties already have been foreclosed, and many others - perhaps the majority - are uninhabited ruins or vacant lots, Aldinger and Wilson said.
Not all tax delinquents will qualify for reduced payments. The biggest discounts go to the largest families with the lowest incomes. Still, for example, a family of six with an income of as much as $50,000 may qualify for some limits on their monthly payments, according to program guidelines. The Philadelphia Unemployment Project and more than 30 other neighborhood groups and counseling agencies "have been trained" to help homeowners figure out whether they qualify, Wilson said.