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CLS Testimony on DHCD’s Consolidated Plan for FY 2019

Homeownership and Consumer

CLS Testimony on DHCD’s Consolidated Plan for FY 2019

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Michael Froehlich, Managing Attorney of CLS’s Homeownership and Consumer Rights Unit, testified today before the City of Philadelphia’s Division of Housing and Community Development (DHCD) about the importance of legal representation for low-income homeowners and tenants.  CLS and DHCD have a long-standing partnership and have worked together for many years to prevent homelessness.


Community Legal Services (CLS) is pleased to continue our many years of partnership with the Division of Housing and Community Development (DHCD) to preserve homeownership for low-income Philadelphians.  As DHCD puts together its Consolidated Plan for FY 2019, we urge DHCD to renew its commitment to foreclosure prevention as a means to prevent homelessness and to continue to expand its work into the critical need for eviction prevention. 


Through its current contract with DHCD, CLS provides one-on-one consultation with housing counselors; accepts referrals of cases from housing counselors for legal representation; provides an attorney and a paralegal to attend each weekly session of the Mortgage Foreclosure Diversion program; and provides training for counselors on a full range of foreclosure-related topics by legal advocates known nationally for their expertise.  The CLS foreclosure defense program is closely coordinated with the Save Your Home Philly Hotline and the DHCD housing counselor network.


The advanced ties between CLS lawyers and DHCD officials and housing counselors, built through years of joint advocacy, trainings, and legal representation, and is essential for the continued operation of the Court’s Mortgage Foreclosure Diversion Program.  Our partnership has helped save the homes of over 11,000 Philadelphia residents, and we are very grateful to continue this relationship.


With a renewed foreclosure prevention contract, CLS expects to continue to represent over 250 homeowners each year referred by housing counselors, the Save Your Home Philly Hotline, and the Foreclosure Diversion Program.  CLS will also continue to train and advise housing counselors on the foreclosure diversion process, opportunities to modify delinquent mortgage loans to save homes, and on other issues in representing homeowners in foreclosure at formal training events and at meetings hosted by DHCD.


I wanted to take this opportunity to highlight a few of the issues that face homeowners in the coming year.


First, as you may know, the federal Home Affordable Modification Program (HAMP) stopped accepting new applications at the end of 2016.  In the Philadelphia Metropolitan Statistical Area, HAMP was directly responsible for over 33,000 permanent mortgage loan modifications with a median mortgage payment reduction of approximately $400 per month.  However, mortgages ensured by the Federal Housing Agency (FHA) will continue to be eligible for FHA-HAMP, and mortgages owned by Fannie Mae and Freddie Mac are eligible for a new loan modification program called Flex Mod.  Other mortgages may be eligible for in-house mortgage loan modifications offered by individual mortgage loan servicers.  The terms of these in-house mortgage loan modifications vary significantly between servicers, and CLS continues to work with housing counsellors and others to ensure that new loan modification programs are affordable and uniformly available to homeowners.


Second, over the last several years, CLS has worked closely with DHCD to prioritize representation to low-income homeowners facing tax foreclosure sales.  Today, I am happy to report that because of this partnership, we have made great strides in ensuring that no low-income or working class family in Philadelphia should lose their home due to delinquent property taxes, especially if they are a senior citizen or a person with a disability.  Six years ago, delinquent property taxes were the ninth most common issue for which individuals came to our North Philadelphia office seeking legal representation.  In 2017, legal issues surrounding delinquent property taxes have become THE most common issue.  CLS responded to this increase by hiring two additional attorneys to represent these homeowners.  We also worked closely with the City, the Courts, DHCD, and other stakeholders on the creation of a Tax Foreclosure Prevention Project to provide more individualized assistance to homeowners facing the loss of their homes due to delinquent property taxes.


Third, in 2016, CLS witnessed a spike in the number of homeowners with reverse mortgages facing foreclosures.  CLS continues to represent homeowners in court to obtain repayment agreements on delinquent taxes and insurance and file chapter 13 bankruptcy petitions to reorganize debts. 


Fourth, in the last year, CLS has struggled to come up with a solution to a vexing problem that is within the City’s ability to resolve on its own.  When a homeowner falls behind in her mortgage, she also commonly falls behind in her water and gas bill.  These delinquent water and gas bills may then become municipal liens on her home.  When the homeowner obtains a new job or otherwise becomes able to resume making mortgage payments, her mortgage servicer will not approve her for a mortgage loan modification unless she either pays off her water or gas lien (which she typically cannot afford to do all at once) or the City agrees to subordinate the lien (which the City, to date, has been reluctant to do.)  Therefore, the homeowner is unable to obtain a loan modification and loses her home at a sheriff sale.  CLS continues to advocate for PGW and the Water Department to adopt a formalized protocol to subordinate these municipal liens when they are the last barrier to saving one’s home.


These are just a few of the homeownership issues that CLS attorneys and advocates are addressing as we provide representation to low-income Philadelphians seeking to save their homes.

In addition, CLS urges DHCD to continue addressing the equally critical need for eviction prevention and anti-displacement measures.  Forty-eight percent of homes in Philadelphia are occupied by renters. Each year, 24,000 households face adverse actions related to their rental housing, including lockouts and other forms of illegal eviction. Beyond the damage to individuals and families, evictions can unravel the fabric of a community, helping to ensure that neighbors remain strangers and that their collective capacity to promote civil engagement remains untapped. Investing in eviction prevention and anti-displacement measures, including an increase in rental assistance and ensuring a right to counsel for tenants, has proven to be cost effective and is one of the best measures to prevent evictions, housing and communal instability, and homelessness. 

CLS is grateful for DHCD partnership and support that has allowed tenant advocates to expand innovative models of access to justice and court reform, such as the Philadelphia Landlord/Tenant Help Center Collaborative, a partnership of leaders of the legal services community, pro bono leaders, and the judiciary formed to address the crisis of lack of access to counsel in landlord-tenant court, which has enormous impact on low-income individuals and families and their basic need of shelter. With support from City Council and DHCD, we have recently expanded the Landlord Tenant Legal Help Center, a unique court-based model of legal advice, direct outreach, tenant rights education, a live hotline for tenant information and advice, and referrals to legal representation for tenants facing eviction.

In addition to continued investment in eviction prevention and anti-displacement measures, we hope to continue to see DHCD articulating the goals and objectives of the Assessment of Fair Housing (AFH) in its plans, funding decisions, and policies.  This includes supporting the creation and development of programs, such as an Inclusionary or Mixed Income housing program, that can be designed to both address the need of housing affordability and alleviation of cost-burdened households on the private market; as well as address AFH goals of desegregation of high-opportunity areas, and anti-gentrification and equitable development in Racially and Ethnically Concentrated Areas of Poverty(R/E CAPS).  DHCD (and PHA) are charged with continuing to use the AFH Assessment tool to “identify fair housing issues” and to “develop a plan to overcome them.”[1] We are encouraged to see references to AFH goals and objectives made in the Consolidated Plan.

We look forward to continuing the dynamic, productive foreclosure and eviction prevention partnership between DHCD and CLS in the year ahead.



[1] Affirmatively Furthering Fair Housing Rule Guidebook (Version 1), December 2015,  p. 8

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