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Foreclosure Assistance for Homeowners Struggling with Property Taxes

Following up on legislation passed in the fall of last year, the city of Philadelphia this week announced changes to the city’s foreclosure prevention program designed to help struggling homeowners who are facing foreclosure after falling behind on their property taxes.

During an announcement at the Philadelphia City Hall on Monday, government representatives and anti-poverty advocates united to announce a new $400,000 Award from the Pennsylvania Housing Finance Authority’s Fair Grant Program. State Sen. Vincent Hughes said that the award was designed “to deal specifically with all the issues around foreclosure and preventing folks from going down that path.”

The initiative is the latest program designed to combat Philadelphia foreclosures related to property tax delinquency. According to the Philadelphia City Council website, between 2010 and 2016, Philadelphia saw a 1,210 percent increase in tax foreclosure filings. The website explains that “a City Council analysis found that the majority of tax foreclosure filings against owner-occupied homes were located in low-income communities of color. In many cases, economically vulnerable homeowners count their home as their sole asset of value.”

“We successfully mobilized to stop mortgage foreclosures during the housing crisis, which prevented homelessness, displacement, and mass disruption in our communities,” Council President Darrell L. Clarke (5th District) said. “However, the City—in a well-intentioned effort to increase revenue collections—became far more aggressive in filing tax foreclosures. Contributing to homelessness or deeper poverty by seizing the homes of people in economic crisis is just not good policy.”

In addition to the new award from the Pennsylvania Housing Finance Authority’s Fair Grant Program, last October the Philadelphia City Council passed legislation to modify the city’s Owner-Occupied Payment Agreement (OOPA), a program designed to help homeowners avoid tax foreclosures. Applying for OOPA relief allows homeowners to avoid foreclosure and set up payment plans, and to roll future tax payments into existing payment plan agreements if they qualify. OOPA applicants can also request to meet with a housing counselor.

"Tax delinquencies have been an ongoing problem in the city of Philadelphia," said Stephen M. Hladik, Partner, Hladik, Onorato & Federman, LLP. "At the end of 2017, there were over 70,000 parcels in the city that had delinquent taxes. With that scope of delinquent properties, the tax loss to the city is staggering, exceeding $150 million. At that sum, the city is forced into foreclosing on properties to try and recoup the lost taxes. The city reviewed where the predominant delinquencies were and it became apparent that the less affluent sections of the city were often the places where the percentage of properties that were delinquent were higher. This new program serves to benefit the hard-hit homeowners, and it offers a means for owners to make monthly payments on taxes and still maintain a roof over their heads. Property owners may also be able to be free of interest and penalties, depending on their income level. A sizable grant from the Pennsylvania Housing Finance Agency will greatly assist. The program sounds like it will be a good way for homeowners to obtain relief and keep their houses. In turn, it will benefit lenders and servicers, as it could lessen the burden of advancing taxes to prevent tax sales."

“We applaud the Philadelphia City Council for stepping in to assist those homeowners who are struggling to pay their property taxes,” said Bradley J. Osborne, Managing Attorney at Richard M. Squire & Associates, LLC, a Legal League 100 member firm that operates in Pennsylvania. “The tax foreclosure prevention measures are similar to those measures implemented by the city during the last economic downturn. Our office has successfully worked side-by-side through the Philadelphia County Mortgage Foreclosure Diversion Program with the four agencies awarded the grant to assist seniors. And while the measures are intended to benefit the homeowners in Philadelphia, they also result in additional protection for mortgage lenders and servicers by virtue of slowing down the tax foreclosure process which can negatively impact their mortgage liens.”

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at [email protected].

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