Assessing Philadelphia’s Foreclosure Diversion Program

For many low- and moderate-income families, a home is often their single largest asset. Like we did with our study of predatory lending several years ago, TRF is committed to gaining a thorough understanding of the issue in support of actionable policy solutions to help those affected. 

As the national housing crisis continues to escalate, state and local lawmakers are searching for ways to forestall the foreclosures that would leave numerous families without a home. Philadelphia’s Residential Mortgage Foreclosure Diversion Pilot Program has been an extraordinary response to this problem. Among the first of its kind in the country, the program was created in 2008 by the Court of Common Pleas of Philadelphia County and the First Judicial District of Pennsylvania, in an attempt to save homes and communities being undermined by mortgage foreclosures.  The Diversion Program works by requiring a “conciliation conference” between parties for all residential foreclosure actions.  During this conference, eligible homeowners, with the assistance of pro bono housing counseling and legal assistance, meet with counsel and lenders/ servicers to explore possible alternatives to a Sheriff’s Sale.

In 2009, TRF began a multi-phase study funded by the Open Society Institute and William Penn Foundation to evaluate the short- and long-term impacts of the Diversion Program as an innovative solution to the ongoing housing crisis. As of September 30, 2010, TRF has analyzed 13,000 cases that have progressed through the program, gathering information on the kind of resolution people achieved and the sustainability of those resolutions, including the likelihood that someone remains in their home a year after the resolution.

The goal of this evaluation project is to better understand the parameters around the utility and benefits of the program. The knowledge gained will help others nationwide who wish to learn from and potentially, replicate the Philadelphia program. TRF’s assessment also takes into account feedback from decision makers and opinion leaders in the related fields of policy, lending and law with the goal of more effectively using the information to shape recommendations on realigning attention and resources to the program. TRF expects to release interim results several times over the coming year.