Municipalities Respond to Foreclosure Crisis

[Jun 23, 2008.]

 

Last November, the US Conference of Mayors released some harrowing data. Losses of approximately $166 billion were predicted for361 American cities during this upcoming year as a direct or indirect result of the recent housing crisis. Cities' revenue from taxes, jobs, and consumer spending all decrease when the housing market declines. When people's houses are foreclosed, local municipal governments' revenue suffers acutely.

Now, many of America's cities have taken special measures to deal with the housing crisis. These cities include Los Angeles, CA, Baltimore, MD, and Trenton, NJ. The latest city to join this tendency is Philadelphia.

Philadelphia has implemented a new law: houses cannot be foreclosed and sold off until the bank and the home buyer try to come to come up with a different payment plan. Only if this final attempt to prevent foreclosure fails can the sale of the home proceed.

As part of the implementation of this new law, Philadelphia recently provided one man who couldn't make the monthly payment on his mortgage with a volunteer lawyer and a real estate expert. For the past two months, the man in question - Aaron Brokenbough - has negotiating with his bank to keep his home, aided by the lawyer and the housing expert.

Meanwhile Jacksonville, FL has been providing zero-interest loans to those of its residents who are in danger of losing their homes. Jacksonville city administrators are starting to advertise this new measure this week. Now, homeowners who might not be able to make the minimum payment on their mortgages can borrow a maximum of $5,000 at no interest. If the homeowners then manage to keep their homes for five years, they will be free of the $5,000 debt.

Douglas Palmer, the president of the US conference of mayors and the mayor of Trenton, NJ speaks of a growing trend among America's cities in dealing with the housing crisis: "We can't wait on the federal government... we're taking action.