City to Begin Working With At-Risk Homeowners & Legal Community on Economically Efficient & Humane Property Tax Programs
Philadelphia, Oct. 5, 2017 – Philadelphia City Council on Thursday gave final passage to Bill No. 170519, which will create a Tax Foreclosure Diversion Program offering housing counseling assistance and payment installment agreements to help homeowners facing financial crisis. Council President Darrell L. Clarke (5th District) and Councilwoman Cindy Bass (8th District) introduced the bill during the 2016-2017 legislative session following a dramatic spike in City foreclosure filings on homeowners in low-income communities.
Upon enactment, the Administration will have 90 days to authorize a program offering housing counseling assistance and hardship payment agreements and deferrals before moving to foreclose on residents facing financial difficulty. Qualifying homeowners will also be allowed to apply for state property rebate programs that support seniors, widows and widowers, and people with disabilities.
“I thank my colleagues on City Council for supporting the Tax Foreclosure Diversion Program, which will extend a lifeline to our most vulnerable residents while stabilizing neighborhoods at risk of decline and ensuring balance in neighborhoods where gentrification is taking hold,” Council President Clarke said.
“Government should be in the business of ending forced displacement and homelessness, not contributing to it by foreclosing on vulnerable people. No senior should be put out of their home, ever. I’m going to keep working with the housing advocacy and counseling community to ensure that every Philadelphian is able to live in a community of choice.”
“I’m glad City Council passed the Tax Foreclosure Diversion Program legislation, which will protect longtime homeowners in Philadelphia’s evolving housing market,” Councilwoman Bass said. “Our senior residents who are on fixed incomes are often faced with the financial hardship of maintaining their homes. We want our seniors, the anchors in our communities, to be able to age in place. This program will help keep the most vulnerable Philadelphians in their homes, and help maintain our middle neighborhoods where home ownership is a vital community asset.”
Last year, the City filed 10,649 tax foreclosure petitions, a 1,210-percent increase over 2010, when 813 petitions were filed. Nearly half of foreclosure petitions filed in 2016 were against owner-occupied properties, mostly in low- to moderate-income communities of color with annual household incomes as low as $5,000.
In response to the sharp spike in foreclosures, the Office of the President began compiling data on affected homeowners, which can be viewed and searched here.
“We are proud to have worked with Council President Clarke on this bill, which sets up a framework to help stop the tide of City foreclosures affecting Philadelphia’s most vulnerable residents,” said Montgomery L. Wilson, Esq., a senior attorney at Community Legal Services (CLS). “Housing instability is a serious threat to residents who are on fixed incomes, such as seniors and the disabled, as well as to hard-working people whose wages have not kept pace with rising costs. We know taxpayers do not want their government to contribute to poverty and homelessness by turning a blind eye to vulnerable neighbors. This bill is a strong step forward, but there is still work ahead to make this program a reality. CLS and the housing counseling community will continue to work with City Council and the Kenney Administration toward fair, inclusive, and equitable housing in Philadelphia.”
Under the Tax Foreclosure Diversion Program, real estate tax bills will rolled into a payment plan. Those qualifying homeowners will be considered in compliance with the City, which will allow them to qualify for up to $900 in state property tax rebates annually, thereby increasing the City’s overall tax collection. Currently, homeowners who have fallen behind on payments through hardship are – counterproductively — disqualified from participation in state programs that are designed specifically to help them. The Tax Foreclosure Diversion Program eliminates unnecessary bureaucratic barriers that push already vulnerable people deeper into poverty.
The Tax Foreclosure Diversion bill was amended at the Revenue Department’s request to provide administrative flexibility. President Clarke on Thursday reiterated that City Council would maintain an assertive and engaged role on behalf of vulnerable constituents.
“Philadelphia is rightfully proud of the Mortgage Foreclosure Prevention Program, which last year celebrated saving more than 10,000 homes from bank foreclosure following the Great Recession. Communities across America are still grappling with the effects of the housing bubble and crash, caused in part by profit-hungry financial firms that offered risky loan products that set people up to fail,” Council President Clarke said.
“The role of government is to set people up to succeed, but bureaucracy and shortsightedness do at times get in the way,” Council President Clarke continued. “I’m grateful to my team and to the courts that spotted a problem in the making, recognized the urgency for vulnerable people, and immediately got to work to prevent mass tax foreclosures in our communities. I’m excited each and every day to get to work for the people who need our help the most.”
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