How Philadelphia’s Bailout Model Influences Obama’s Plan: Who Will it Help?
Article by Patricia Payne
If you are having trouble keeping your home out of foreclosure, and your lender is offering you no help in restructuring your mortgage, you may qualify for court mediation. Through the new national economic stimulus plan, judges can act as a mediator between you and your lender to arrange a win/win solution – which will allow you to keep your home, while your mortgage company continues making money on their investment.
Obama’s Plan, Derived from the City of Brotherly Love
Before newly elected President Barack Obama pushed through an economic stimulus plan in Congress, which included billion in funds to help prevent foreclosure on millions of American homes, the City of Brotherly Love implemented a similar plan to aid the city’s residents suffering eminent foreclosure. The Philadelphia Mortgage Foreclosure Protection Program (MFPP) was enacted in 2008 by Mayor Michael Nutter. The hope was to offer a number of initiatives to battle the many foreclosures that were occurring in the city.
How the Philadelphia Bailout Plan Worked
The MFPP stipulated that all homes in foreclosure approaching a sheriff’s sale stage would be considered for loan modification. The government intervention paid to appropriately train 100 pro bono attorneys who were willing to donate their time to help Philadelphia residents find ways to keep their homes. The resulting meetings between homeowners and lenders either found ways to modify the loan so that the borrower could keep the home, or “gracefully exit” by a smooth foreclosure transition.
What was the outcome? Though about 20% of homeowners who went through the intermediation process ended up losing their homes due to insufficient income, credit issues, or other financial failings, many more homeowners and lenders worked together to find a solution to keep the mortgage current and homeowners in their homes.
Translating Philadelphia’s Success to the Entire Nation
These statistics were attractive to then President-Elect Obama when Nutter approached him with the details of the Philadelphia plan in December 2008. Obama’s economic team modeled the current judicial intervention after the successful Philadelphia MFPP. Not only does the model work within the national stimulus plan, but other cities around the country are following suit with similar plans. Boston, Pittsburgh, and even the entire state of New Jersey are enacting plans to help homeowners find ways to keep their homes and prevent foreclosure through judicial intervention.
Now with the stimulus plan signed into law by President Obama in February 2009, the availability of help to hold back the tide of foreclosure proceedings is a breath of fresh air to millions of American homeowners. Through a national call center, homeowners can contact representatives that can set up a plan to get lenders and borrowers together to work out a deal in front of a judge. The mortgage bailout plan includes incentives for lenders to negotiate, restructure the existing mortgage, and continue to service it without default.
If you are a homeowner behind on your mortgage payment, be sure to take advantage of the help created by the trailblazers in Philadelphia. With the help of a judicial intervention, you could keep your home and your mortgage.
This article is intended for general information. Always seek sound financial and legal advice before making any financial decision.
About the Author
Helpful mortgage information at Online-Home-Mortgage.net P. Payne works for OHM Mortgage and Foreclosure Information Site providing answers to all those questions people need to know.