You might have heard of some of the innovative initiatives Philadelphia has pursued in the fight against foreclosures. The city courts, led by Hon. Annette Rizzo, pioneered a model that requires homeowners and servicers to come together in the same room and work towards a mutually agreeable solution, known in Philadelphia as the Residential Mortgage Foreclosure Diversion Program. The Diversion Program inspired similar initiatives across the country, including the Circuit Court of Cook County’s Mortgage Foreclosure Mediation Program. Pennsylvania’s program to help unemployed homeowners also inspired a federal response. The Homeowners’ Emergency Mortgage Assistance Program (HEMAP) has existed in Pennsylvania since 1983 under Act 91 and offers bridge loans for up to 36 months to homeowners suffering loss of income through no fault of their own. In June 2011, HUD announced the Emergency Homeowners’ Loan Program (EHLP) modeled on HEMAP, though with some meaningful differences—for examples, currently employed homeowners with delinquency due to past unemployment are not eligible.


Blake coauthored a recently-released report, “No Place Like Home: Philadelphia’s Approach to Foreclosure Prevention,” which assesses the different pieces of Philadelphia’s foreclosure strategy and makes recommendations to improve their response. One challenge that Philadelphia faces is that Pennsylvania cut funding to HEMAP so drastically that the Pennsylvania Housing Finance Agency will no longer be able to administer the program. While the loss of the bridge loan program will directly harm unemployed homeowners, the loss of another piece of HEMAP could pose new challenges to the structure of Philadelphia’s foreclosure response as well. Under HEMAP, servicers were required to send a notice to homeowners 60 days delinquent on their mortgages informing that they are at risk of foreclosure and listing available resources. This mechanism gave the state a way of identifying and reaching out to at-risk homeowners before a foreclosure is filed—something Illinois lacks. In Cook County, our mediation program requires homeowners to opt in to the program, while Philadelphia’s Diversion Program enrolls homeowners by default. Since our program requires homeowners to be proactive, early outreach and education is a crucial component of the program’s success, but outreach groups cannot identify homeowners until a foreclosure is filed. A system similar to Act 91 in Illinois could help community groups reach homeowners before their situation becomes dire.

We also learned from Rachel that Philadelphia’s housing counselors are facing many of the same challenges as Chicago region counselors. While counselors have been suffering under dramatic funding cuts and increased demand, it has been difficult to make the case for more funding when there is not a lot of good data on the efficacy of counseling. Counselors in both regions are exploring ways to make data collection on counseling outcomes more uniform, meaningful, and streamlined. Additionally, counselors recognize that there is variation in the quality of counseling services being provided by different agencies. There is interest in pursuing more rigorous certification and performance standards for counselors, perhaps at a national level.

When you look at the scope of the foreclosure crisis across the nation, it can seem overwhelming—but at a more micro level, strides are being made. We can learn a lot from Philadelphia’s successes—and their challenges.