One Philadelphia man, who saved his home by working through the city’s mandatory foreclosure-diversion program, said his mortgage lender was finally “forced” to sit down with him to work out a deal. A new study suggests the three-year-old diversion plan is having a positive effect residential property disputes.
The independent report, funded by the Open Society Institute and the William Penn Foundation, says in the last two years, the program has been a permanent fixture and the foreclosure rate has dropped significantly for residential real estate.
Before the Common Pleas Court diversion began as a trial program, 27 percent of homeowners in foreclosure ended up losing their homes. Within half a year of the program’s 2008 initiation, that figure dropped to 14.5 percent and then to below 6 percent.
The research pointed out that the foreclosure diversion idea took hold at the height of the economic recession when foreclosures in the city averaged more than 8,000 per year. Under the program, homeowners and their legal advisors meet in person with the lender’s attorneys to try to salvage mortgage agreements.
The survey of over 16,000 foreclosures through March of this year found that, while 16 percent of foreclosed homes did end up at sheriff’s sale, 35 percent of homeowners were able to come to agreeable terms with lenders. The diversion program, the report stated, worked equally well for minorities and low-income homeowners as it did for anyone else.
When homeowners in foreclosure failed to show up for a conciliation meeting with a lender, 50 percent lost their properties.
Some delinquent homeowners had tried using services that promised to renegotiate mortgage terms with lenders, yet without success and at a big expense. Later, the same homeowners were able to secure free mortgage modification counseling through the foreclosure-diversion program.
Source: Philly.com, “Study says Philadelphia’s foreclosure diversion is working,” Alan J. Heavens, 15 June 2011