Transcript The Philadelphia Story

The Philadelphia Story
Philadelphia Court of Common Pleas
Residential Mortgage Foreclosure
Diversion Pilot Program
Part of a Solution But no Panacea
OUTLINE
• Where we are now (Brief Overview of the
“Philadelphia Model”)
• How we got here
– Recent History
– Ancient History
• Details about the Model
• What Works What Doesn’t
• What it is, What it isn’t
WHAT IT IS
(will get into details and questions later)
• Really not One Thing – Brings together many
elements
• Court Program
• Outreach*
• Hotline*
• Housing Counselors*
• Volunteer private
attorneys
• Legal Services
Attorneys
* funded in part by the City
• Pro Bono Judge’s Pro Tem (JPT)
• Training for attorney volunteers and
counselors
• Court Sanctioned pro se petitions to stay
sheriff sales
• Media Campaign to make folks aware
• (Missing – robust private mortgage
foreclosure defense bar)
• City contribution to State Sponsored
Mortgage Rescue Loan
Mortgage Foreclosure Diversion
Pilot Program In a Nutshell
• For cases started before 9/8/2008
Sheriff sale postponed and conference
scheduled at request of homeowner
• For cases started after 9/8/2008
Judgment in foreclosure cannot be entered
till conference concluded -conference
automatically scheduled by Court about 60
days out
• Notice of Program sent to Homeowner with
complaint (day forward) or with Sheriff Sale
notice (day backward)
• Notice Refers Homeowner to Hotline
• Hotline Staffed by Paralegals run by
Philadelphia Legal Assistance
• Hotline sets up Appointment with Housing
Counselor
• Housing Counselor Does Budget and Helps
with affordable proposal for avoiding
foreclosure
• Counselor sends proposal to Lender and
Lender’s Attorney;
• Lender’s attorney provides counter
proposal – prior to conference;
• At conference if there is gap between
proposal and counter – Judge Pro Tem
(JPT) is available to help bridge the gap;
• On day of conference eligible
unrepresented homeowners assigned pro
bono counsel;
• Housing counselor participates in
conference with attorney;
• JPT makes recommendation;
• If resolution not reached conference can
be continued;
• Sales can be further postponed;
• Entry of default can be further delayed;
• Legal Services Attorney available to
provide advice guidance to counselors and
pro bono counsel
• Where conference fails to get a resolution
order entered permitting sale to proceed or
case to proceed to judgment – often after
some interlude – though not always
• Hotline monitors results and provides feed
back loop
• Counselors available to help homeowners
with pro se petitions to prevent sale
• For some eligible clients, legal services
attorneys or pro bono attorneys available
to litigate case
The Importance of the Community
Organizer/Legal Aid Relationship in Creating
Philadelphia’s Diversion Program
The Development of the Campaign
Direct Actions on Servicers  Formation of
“Save Our Homes” Coalition  Engaging City
Council  Pressuring the Sheriff 
“Moratorium Won!”. . . Now What  Mortgage
Foreclosure Steering Committee / Judge Rizzo
Jump in Feet First The Importance of
Outreach
Direct Actions on Servicers
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ACORN and organizations nationwide have
engaged in lender/servicer specific
campaigns for years
Outcomes often organization specific
Impacts diffuse, did not stop “neighborhood
spiraling”
Formation of “Save Our Homes” Coalition
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Save Our Homes Coalition (SOHC) created in January ’08.
Coalition of Philadelphia Unemployment Project (PUP), ACORN,
Community Legal Services, PLA, numerous housing counseling
agencies; City Council members (through there representatives);
City office of OHCD; Mayor’s Office through the City’s Consumer
Advocate; Private Consumer Attorneys and homeowners facing
foreclosure;
The goal being to “carve out” Philadelphia as a place where
servicers would have to prove that they are actively engaged in loss
mitigation, conforming to best practices, etc.
Unofficial motto: “We don’t want to end up like (Cleveland/Detroit).”
All organizations had long histories of both working together and
working on the issue. PUP/CLS – Creation of HEMAP (1983),
ACORN/CLS – Passage of Local Anti-Predatory Lending Law
(2001), ACORN/PUP/CLS/PLA – Temporary Phila. Moratorium
(2004); Many members of (SOHC) also part of Steering Group Court
would later look to shape the program.
Engaging City Council
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Lobbying of members of City Council began
in Jan. ’08.
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Councilman Curtis Jones held hearing February 22,
2008: Homeowners facing foreclosure testified about
their ARM mortgages, unresponsive lenders, wide media
coverage prompting Council to be using “m-word”.
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Lobbying continues throughout month, ACORN
hand delivers invites to Council for March event
with Sheriff
Pressuring the Sheriff
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2004 Experience – Sheriff Green reluctantly joined a suit to halt
foreclosure sales in response to a sharp spike, for one month.
After several canceled meetings with the Sheriff, the coalition asking
members of Council and people with relationships to send him
letters urging a postponement of sales; question his staff during
budget hearings
On March 25th, 150 homeowners and 3 members of Council
attended a meeting an Olney neighborhood church, one of the
hardest hit by foreclosures
Sheriff Green, after confirming and reconfirming his attendance,
called 5 minutes into the meeting to cancel
The meeting, led by 4 ACORN members facing foreclosure, leaving
Councilman Jones to say, "Either we'll stop it with a moratorium
voluntarily through court action or we'll stop it through the budget
process and we just won't fund it anymore."
Moratorium Won! . . . Now What?
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On March 27th, Councilman Jones and Majority
Leader Tasco introduced resolution calling on
Sheriff and President Judge Jones to postpone
sales.
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Sheriff staff who were attending the Council meeting
announced 30 minutes after the resolutions passage that
April sales would not take place.
“Moratorium” was catalyst for change, but would have
been meaningless without what happened next.
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Judge Rizzo/Mortgage Foreclosure
Steering Group Jump in Feet First
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Judge Rizzo, who heard advocate case in 2004,
created a Steering Group of lender’s attys,
advocates, the Sheriff’s office and other City
agencies
This group, which had been meeting periodically
since 2004, was mobilized to offer comment/revise
on the Court’s draft of a Mortgage Foreclosure
Diversion Pilot Program
The program was created in seven weeks by this
group, based on “tried and tested case management
tools” – initial conferences for homes scheduled for
April and May sale took place in June.
The Importance of Outreach
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Advocates argued early on for aggressive outreach
to eligible homeowners, two main reasons: mailings
known to be ineffective, “day backward” nature of
early cases
Currently, NACs, ACORN and PUP together knock
on every door of an eligible homeowner prior to
conference, urge call to hotline, see a housing
counselor
Current participation rate between 70-80%,
compared to 5-25% in other mediation programs
Additional Ancient History
• Article By Irv Ackelsberg in NCLC.
• Did not arise out of nowhere – elements
already existed could be brought together
Quickly.
DOES IT WORK
• YES AND NO – It is not a panacea
• Important procedural break on the foreclosure
train that usually runs folks over
• People who have aggressive knowledgeable
counselors and attorneys have opportunity to
get good result not otherwise obtainable often
without litigation
• One great advantage for many clients is
opportunity to get to counsel, either pro bono or
legal services or advocate
RESULTS
• Some things we know, some things we
don’t’
• We know number of sales and judgments
delayed – at least 3,380
• Number of cases reported resolved by
agreements 1200 over past year out of
3,380 participants
• Maybe 2000 still unresolved
• Numbers preliminary may not be accurate
Don’t know
• Overall quality of the agreements
• Are they affordable and sustainable?
• In most cases are they significantly
different than what would occur without the
program?
• Likely – even if agreements less than ideal
most of the 1200 probably would have lost
home without program
Opportunity for Mediation Alone
Does Not Create Incentive for
Meaning for Agreements
• Key to whatever success there has been
in Philadelphia is Judge Rizzo
• Mobilized City support and created
expectation of meaningful results from
lenders
Need external incentives – to reach
Affordable Resolutions
• Mediation does not eliminate servicers
incentives to try to foreclose;
• Greatest Success comes when there are
forces outside the mediation process that
puts pressure on Lender to reach
affordable resolution;
– Such as Making Homes Affordable Plan
– Countrywide Settlement
– Threat of Litigation
NEED ALTERNATIVES BESIDES LOAN
MODIFICATIONS
• HEMAP
• HERO – Predatory Loan Rescue Loan
• HELP – Rescue Loan for folks with good
credit
• FHA Loss Mitigation – Loan Mods, Partial
Claim
• Loan Modification in Bankruptcy (when it
comes)
What It is What it isn’t
• It is a significant procedural brake the
slows things down and puts pressure on
Lender to consider the options
• It is not a panacea and is not a substitute
for the creation of meaningful substantive
options
DANGERS IN TRYING TO
REPLICATE AT STATE WIDE OF
FEDERAL LEVEL
• The Story of Pa H.B. 1042 –
• Know your legislative body