by Mike Sharkey
Staff Writer
What do Jacksonville and Philadelphia have in common?
Both in the eastern time zone? Check.
Both have an NFL team? Check.
Both cities take a dozen letters to spell? Check.
Both have a serious foreclosure problem? Check.
Both have a foreclosure mediation law?
Not yet.
Philadelphia does and it was featured on an “NBC Nightly News” story Feb. 28. Started in June of last year, the program is called the Mortgage Foreclosure Diversion Pilot Program and it’s designed to bring the lender and the borrower together before the lender is forced to start foreclosure proceedings. The conferences are mandatory for cases filed after Sept. 8 and optional for those filed before. The mediations are held every Thursday and about 200 cases are held a week.
Judge Annette Rizzo of the Court of Common Pleas of Philadelphia County is the primary judge involved in the program, however several other judges assist. According to Rachel Gallegos, law clerk to Rizzo, over 3,000 cases were scheduled last year and over 2,000 homeowners took advantage of the opportunity to meet face-to-face with their lender and discuss every option available to keep their home. Of those 2,000 or so, Gallegos said the mediation process enabled over 600 to keep their homes.
The number of cases Rizzo is hearing this year goes up every week. However, the percent of homeowners who show up for their mediation has risen from last year’s 66 percent to about 80 percent.
During the mediations, virtually every aspect of the mortgage is negotiable: interest rate, actual value of the home as opposed to market value, principal, back payments due and the length of the new mortgage. Gallegos said the process involves a lot of give and take, but the number of people who get to keep their homes is worth the effort.
City Council member Kevin Hyde didn’t see the news story, but he’s aware of the program and its potential benefits. Considering Jacksonville and Philadelphia both had between 8,000 and 10,000 foreclosures last year, any program that keeps people in their homes and the houses out of the banks’ hands is worth exploring.
“As a result of the foreclosure summit, I have drafted legislation that the Office of General Counsel is polishing,” said Hyde, an attorney at Foley & Lardner.
Hyde said he doesn’t think the local law will be able to require that the cases be handled by the courts, but he does think the law can require mandatory, face-to-face meetings between the lender and the borrower.
“We are looking for funding from somewhere,” he said. “If we can’t find it, there might be enough pro bono attorneys.”
Hyde said there is currently a petition before the Florida Supreme Court that would make a pre-foreclosure mediation a state law. Such a law would alleviate Hyde’s local funding issue and place it within the courts. However, Hyde said since the Supreme Court likely won’t establish any kind of timetable for passing the law, he’ll continue to seek local legislation. Ideally, Hyde said, he’d like to get the bill passed by April 1 (that would mean one Council cycle and one Council committee cycle), but thinks April 15 is more realistic.
Hyde said there are essentially three pieces to his legislation: education, required mediation and the appointment of a Jacksonville Foreclosure Task Force that would include bankers, attorneys and members of the real estate industry. He also said he would take a close look at what other cities are doing.
“If there is value in the Philadelphia program, let’s adopt it,” said Hyde.
Gallegos said foreclosures in Philadelphia and Jacksonville are happening for the same reasons: people bought more house than they could afford, questionable mortgages, divorce, job loss and even a family illness. Gallegos also said the deals Rizzo sees worked out in her courtroom are “creative and consider many aspects of someone’s financial situation.”
Locally, Jacksonville Area Legal Aid is at the forefront of battling foreclosure from a non-for-profit standpoint. Its counterpart in Philadelphia is Volunteers for the Indigent Person and the organization is a major player in the mediation sessions. If people are struggling to pay their mortgage, it stands to reason it would be nearly impossible to afford quality legal help and Gallegos said VIP will work on behalf of anyone facing foreclosure, regardless of their income level.
Hyde said the local legislation will assure on the home page of the City’s Web site there is a link to information on foreclosure prevention and assistance. Whether his bill passes April 1 or two weeks later, Hyde said that facet of it is something that can be taken care of in 10 minutes. He also stressed the urgency in drafting and passing the legislation given that 1,000 homes a month in Jacksonville are heading towards foreclosure.
The program in Philadelphia may not be the end all solution, but there’s no questioning its success. Without the program, some would have avoided foreclosure. However, hundreds of others wouldn’t.
“We’re keeping people in their homes, we’re helping keep neighborhoods from deteriorating and for every home we save, the property values in the surrounding homes are helped,” said Gallegos.
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