Philadelphia success story
In June, we took note in this space of Sheriff John Green of Philadelphia’s refusal to enforce court-ordered foreclosure auctions in the city. The soul-searching stance of Sheriff Green (we called him ”Not the Sheriff of Nottingham”) prompted city officials to set up a unique program to facilitate negotiations between financial institutions and homeowners in danger of losing their property to foreclosure.
We are very pleased to report that, according to an article in Sunday’s New York Times, the city-sponsored plan has averted almost 80 percent of the foreclosure sales of properties referred to it in its first three months.
The plan, started in June by the city government and the Philadelphia Court of Common Pleas, requires all owner-occupied properties scheduled to be foreclosed and auctioned off to have their mortgages reviewed by borrowers, lenders, and the court before they can be sold.
The Times reports that of the 522 homes referred to the program during the past three months, 230 were permanently removed from sale, and 200 had their planned sales postponed for up to five months. The program is administered by Judge Annette Rizzo of the Court of Common Pleas.
Like everywhere else in the United States, the subprime mortgage crisis produced a tsunami of foreclosure filings in Philadelphia in the past two years. Since the beginning of 2006, more than 14,000 foreclosure filings have been recorded in the City of Brotherly Love.
This depressing state of affairs seemed beyond the control of local officials until Sheriff Green decided he was fed up with forcing his friends and neighbors out of their homes. Sheriff Green, who has worn a badge for 37 years, astounded the legal and financial movers-and-shakers in Philly when he refused to hold court-ordered foreclosure auctions. Without the sheriff and his 241-person department on board to enforce the court’s action, foreclosures in Philadelphia ground to a halt.
Soon after, the City Council opened a legal umbrella over the sheriff’s unilateral (and illegal) action by unanimously enacting a temporary moratorium on foreclosures, and Judge Rizzo asked civic leaders, lenders’ attorneys and housing advocates to set up a process that would determine which homeowners deserved a delay, aid through government programs, or at least a ”graceful exit” from their house. This committee also developed a streamlined process to make loans more affordable for delinquent homeowners who still live in their houses, and homeowners were offered free lawyers for court-supervised ”conciliation sessions” with their loan-servicing companies.
The nation’s attention has been focused in recent days on the U.S. Congress and its efforts to pull together a spectacular $700 bailout for the global financial system, which has been brought to the precipice of a catastrophic meltdown by an orgy of speculation. There has been a lot of heated rhetoric in Washington about making sure that the people on Main Street are protected as well as the tycoons on Wall Street.