Philadelphia Foreclosure Storm Leaves Credit Unions Unruffled

PHILADELPHIA – A soaring number of mortgage defaults here has prompted the City Council, the sheriff and the Philadelphia Unemployment Project to call for a halt in foreclosure auctions. However, it appears the storm is leaving credit unions unruffled. In fact, the collections department at Philadelphia Federal Credit Union reports it’s seeing an all-time low for foreclosures. John Dodds is director of the Philadelphia Unemployment Project, an advocacy group credited with spearheading the drive to halt foreclosures. Dodds told Credit Union Times there are several factors forcing the foreclosure rate up to the point where one week in early February the sheriff’s office saw a record 1,120 homes up for bid. “One problem is lingering high unemployment,” Dodds said. “During the economic recovery the economy continues to lose jobs. Unemployment in Philadelphia is 7.4%. “Predatory lending has been another problem. A lot of people are using their home equity in predatory situations. When something goes wrong, they can’t make payments. They don’t have anything to fall back on,” he added. Michael Wishnow, spokesman for the Pennsylvania Credit Union Association, said the issue of predatory lending has received a lot of mention in the Philadelphia news media. “Certain sub-prime mortgage companies lend at exceptionally high rates and employ dubious sales tactics to trick consumers into mortgages they cannot afford,” Wishnow indicated. “Typically, credit unions do not fit that profile. In fact, consumer groups often hold credit unions out as a lower cost, consumer-friendly alternative to predatory lenders.” Dodds noted the sheriff has met with the presiding judge of Common Pleas Court to ask that she entertain a motion to stay foreclosure sales. However, no formal case has been filed. A mortgage moratorium was actually issued in Philadelphia in 1983 and remained in effect for about 15 months. The Philadelphia Unemployment Project also filed that case. “We spent a year organizing support for legislation that provides loans to homeowners facing foreclosure until they get back on their feet. That legislation passed and is in effect to this day,” Dodds explained. “It was pretty effective. But over the years that program was starved so there was very little money in it. People who apply are being denied. We’re putting a lot of pressure on the agency to increase their approvals, and we’ve got very strong commitment from the new administration (in the governor’s office) to actually increase approvals and go for additional funds. “We hope while a moratorium is in effect we can really get that program up and running. We also need more action from HUD to protect people from FHA foreclosures which are not covered under this program.” Dodds indicated he has not been contacted, at least not yet, by consumer advocates in other areas asking about the idea of a stay in foreclosure auctions, even though foreclosures appear to be a widespread problem. A report by CNN and Money Magazine in early February indicated the five counties with the most foreclosures in 2003 included Cook County, (Chicago), Ill. with 3,034; Wayne County, Mich., 2,998; Marion County (Indianapolis), Ind., 2,214; Maricopa County (Phoenix), Ariz., 2,168; and Dallas County (Dallas), Texas, 2,039. -