Abayomi Azikiwe, editor of the Pan-African News Wire, covering the protest outside the Mortgage Bankers Association summit in Washington, DC on April 16, 2008. (Photo: Alan Pollock).
Originally uploaded by Pan-African News Wire File Photos
Philadelphia Will Try to Reduce Foreclosures
By JON HURDLE
PHILADELPHIA — Philadelphia announced a program on Wednesday to reduce the number of people who are forced from their homes because they cannot afford the payments on an adjustable-rate subprime mortgage.
The program, which officials called the first of its kind by a city, will require any property scheduled for sale by the local sheriff’s office to be referred to officials who will negotiate with lenders in an effort to restructure the loan so that the borrower can keep the property.
About 1,200 foreclosure sales scheduled for April and May have been delayed until July to give borrowers more time to negotiate. About 800 of those properties are owner-occupied, said Ian Phillips of the community advocacy group Acorn, which has helped to structure the program.
Mayor Michael Nutter said the program, in which the city is investing $2 million to pay for legal services and people to counsel homeowners, is intended to solve payment problems before they reach foreclosure. Mr. Nutter urged people to contact the city before they receive a foreclosure letter from their lender.
“The issue of mortgage foreclosure is a crisis not only in Philadelphia but across the country,” he said at a news conference.
Foreclosure filings here rose 18 percent, to 6,237, in 2007 from the previous year and are expected to increase to about 8,500 this year, officials said. In 2006, 37 percent of all mortgage loans made in Philadelphia were sub-prime — made to people with poor credit histories — up from 20 percent in 2004.
Nationally, thousands of home owners with subprime loans have been unable to pay higher mortgage payments after low introductory rates expired.
In the fourth quarter of 2007, the proportion of mortgage loans in foreclosure was 2.04 percent, a record, according to data from the Mortgage Bankers Association, which will release figures for the first quarter of 2008 on Thursday.
Adjustable-rate subprime loans for fourth-quarter 2007 accounted for 7 percent of all mortgages but 42 percent of those in foreclosure, the association said.
Yajaira Cruz-Rivera, a mother of four from Northeast Philadelphia, said that in February 2005 she took out what she thought was a 30-year mortgage for $106,000 at a fixed rate of 7 percent to buy a single-family home. She expected her payments to be a manageable $925 a month.
Two weeks later, she said, she received a letter from the lender, informing her that the monthly payment had risen to $1,235 and the rate to 10.3 percent. By adjusting her budget, Ms. Cruz-Rivera said she could just afford the higher payment, but was unable to meet the lender’s demand when it was raised again, to $1,671. It was then she discovered she had an adjustable-rate subprime loan.
After being threatened with foreclosure, Ms. Cruz-Rivera said she had renegotiated her payment to a fixed rate that carries a payment of $1,284 a month.
Copyright 2008
1 comment:
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Mortgage foreclosure
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