Mark Winston Griffith

Philly Anti-Foreclosure Measures Worth a Close Look

History has shown there are considerable limits on what local governments can do to legislate anti-predatory lending and foreclosure prevention measures. For instance, in 2002 the New York City Council passed an anti-predatory lending law that prohibited the city from doing business with companies tagged as predatory lenders by the city, including Wall Street firms involved in the subprime mortgage industry. Bloomberg vigorously opposed this legislative initiative and the courts eventually determined that it pre-empted state and federal laws.

Since then, the Bloomberg Administration has worked with non-profits and foundations to increase foreclosure prevention counseling, education and legal intervention. Yet in cities across the country attempts to make foreclosure prevention or anti-predatory lending action a structural part of municipal government remain elusive.

That's why Philadelphia's recent anti-foreclosure activism is so intriguing. According to a Philadelphia Inquirer story, "Philadelphia judges, advocates for borrowers, and attorneys for lenders have developed a pilot program they hope will slash the number of mortgage-foreclosure sales in the city....A key component is a timeline requiring mortgage companies to respond more quickly to proposals made by housing counselors on behalf of borrowers in default on their mortgage payments....Under the plan, foreclosed properties occupied by the owners - representing 80 percent of foreclosures - will be diverted to a different track from vacant and investor-owned properties. The procedure will apply to all mortgages, not just subprime loans, which are at the heart of the national spike in foreclosures...Philadelphia Sheriff John D. Green stayed April's foreclosure sales after City Council passed a resolution March 27 calling for a moratorium."

Time will tell whether this will actually work. For instance attempts to get lenders to observe a mortgage affordability standard for modifying loans will be met with stiff challenges. Nonetheless, it's a bold move for Philadelphia city officials to take and a national model other cities might want to take a long, hard look at.

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Posted at 7:00 AM, Apr 25, 2008 in Economic Opportunity
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