In the aftermath of the 2008 recession and the burst of the housing bubble, foreclosure rates skyrocketed throughout the nation. In an effort to aid its citizens, the city of Philadelphia created a foreclosure program that would become the most lauded in the nation. Thanks to the Homeowners’ Emergency Mortgage Assistance Program, 5,755 Philadelphians were able to avoid foreclosure and stay in their homes despite their mortgage debt. The celebrated program turns five years old this week.
Philadelphia Helps Citizens with Mortgage Debt
The program that Philadelphia began has had incredible success rate. It’s estimated that 85 to 88 percent of those who signed up to be part of the program were able to successfully avert foreclosure and remain in their homes. The program was designed to help those struggling with mortgage debt negotiate with their lenders. By sponsoring basic money management exercises, such as debt negotiation, mortgage modification, and other tactics, Philadelphia was able to keep thousands of residents in their homes.
The success of Philadelphia’s program has prompted other cities to take action on the behalf of those struggling with mortgage debt. Increased financial-literacy has not only helped money management, but also taught homeowners how to handle mortgage debt and find alternatives to foreclosure. In it’s effort to help homeowners struggling with mortgage debt, Philadelphia has spent an approximate $17 million since the program’s inception.
While Philadelphia’s program has been hugely successfully in helping homeowners avert foreclosure, many say that the secret to the program is “common sense.” Richard Cordray, director of the federal Consumer Financial Protection Bureau, says that “troubled homeowners and lenders should talk, and if they talk … they may find solutions to many problems.” So far, 15,417 homeowners have participated in the program and many continue to take advantage of this opportunity to handle their mortgage debt in a supervised setting.