Legal News

Phila. Mortgage Foreclosure Program Could Become Mandatory Statewide

By Brian Harris

By Amaris Elliott-Engel
Of the Legal Staff

The Philadelphia court program designed to handle the city's mortgage foreclosure crisis with more humanity may become a statewide mandate if bills introduced in the state House of Representatives and state Senate are passed into law.

Both bills would require each of the state's 60 judicial districts to establish a residential mortgage foreclosure conciliation program to aid workouts between lenders and borrowers in mortgage foreclosure cases. Conciliation conferences would be mandatory before entry of judgments could be entered in residential foreclosure actions.

A House of Representatives Commerce Committee hearing was held last week in City Hall on the House bill. A sibling bill in the Senate was referred to the Urban Affairs and Housing committee, but no action has been taken yet on the bill.

Some court leaders, however, indicated making a mortgage foreclosure conciliation program mandatory would be a heavy burden for the state's rural counties.

In a letter distributed at the committee hearing, James Koval of the Administrative Office of Pennsylvania Courts wrote that the need for a mortgage foreclosure conciliation program is not uniform in the state and that the bills should be altered so the state Supreme Court can address the need for a specialized mortgage foreclosure program on a county-by-county basis.

Koval said there are nine judicial districts covering 11 counties that have one judge, and 15 districts covering 19 counties that have two judges. In smaller judicial districts, a mandatory program might be a heavy burden on districts with much fewer administrative staff and fewer volunteer attorneys to advise borrower-defendants and serve as judges pro tem in the conciliation conferences, Koval said.

Koval noted the Senate bill might be amended to allow "the Supreme Court the flexibility to address the need for such programs on a county-by-county basis" and asked that the House bill be similarly revised.

In another letter distributed at the hearing, Butler Common Pleas Judge Marilyn J. Horan said her county is going to be implementing court procedures for conferences in mortgage foreclosures.  But Horan said program mandates without funding "can create substantial difficulties for counties."

Horan suggested that an "opt-in" model for conciliation conferences is better. An opt-in model is being advocated by lender representatives of the Philadelphia Mortgage Foreclosure Steering Committee.

Philadelphia Common Pleas Judge Annette M. Rizzo, who runs the city's mortgage foreclosure program, said it is important for a mortgage foreclosure program to be mandatory statewide in order to address a countrywide problem. But Rizzo said the terms of the program should be flexible and that counties that only have the resources for optional conferences requested by mortgage foreclosure litigants should be allowed to pursue that mechanism to fulfill a legislative mandate.

House Bill 1042's primary sponsor is Rep. Michael P. McGeehan, D-Philadelphia.  Senate Bill 222's primary sponsor is state Sen. Stewart Greenleaf, R-Montgomery.

Full post as published by The Legal Intelligencer Blog on June 09, 2009 (boomark / email).