Here's a guest blog by Brady Russell, organizer of the Philadelphia Unemployment Project.
Advocates for homeowners around the country looking for local strategies for lowering foreclosure rates might want to check in with the local sheriff's office. In Philadelphia, counselors at the Unemployment Information Center, a sister organization to the Philadelphia Unemployment Project found that the fees charged by the local sheriff's office placed an undue burden on homeowners.
Our sheriff charges homeowners for the costs their offices incur to sell their homes out from under them. Your sheriff may do the same, and there may be very little oversight over how much or when he charges homeowners. After the home is auctioned off, the sale price goes to pay back the lender who gave the consumer the loan they initially defaulted on. The sale price also pays the lender's attorneys, who carried out the foreclosure on its behalf and the sheriff, who advertised and ran the auction. Whatever is left goes to the homeowner.
Here in Pennsylvania, the Sheriff is required to advertise sheriff's sale homes in two places, a generally circulated paper - the legal paper. There are several general circulation papers here, but our Sheriff says that he calculates his price based on the most expensive one, The Philadelphia Inquirer. Only, he doesn't place his ads in the Inquirer, he places them in several smaller papers all around town.
The sheriff doesn't have to place any ads until three weeks before the sale, but he charges for the ads 90 days in advance. Typically, the foreclosing attorney pays the fee and then demands that the homeowner repay them the fee before they will work out a forbearance agreement to save their house.
In other words, the higher the sheriff's fee, the hard it is for a homeowner to even begin talking about saving their house.
It's no great concern to the sheriff if the consumer can't find the money to pay the fee, though. He will get paid out of the proceeds of the sale. Its no great concern to the attorneys, either, as they will also get paid back first when the house goes to sale.
The problem is the consumers'. In many cases, a consumer can save their
home by renegotiating loan terms with their lender. In the case of HUD
certified loans, the lender is even required to pursue a loss mitigation
strategy with the homeowner, but the lenders won't discuss loss
mitigation until both the attorneys fees and the sheriff's fees are paid.
So, lowering Sheriff's fees is a straightforward strategy for lowering
foreclosure rates. The easier Sheriff's fees are to pay, the more people
can get into a loss mitigation plan the fewer homes make it to a final
sheriff's sale. It also helps to give people more time. In 2004, the
Philaelphia Unemployment Project got $800 lopped off a sheriff's fees
and bought homeowners 30 more days to come up with the lowered fee.
Now, the price has risen another $500 and homeowners have to pay in 90
days out - again. Why the regression? Because the Sheriff thinks he can
get away with it.
Sheriff's fees are set by the sheriff's office here. It might be the
same way in your community. In other words, they can be fairly
arbitrary. It's not right, but, because many sheriff's are elected
officials, it also means that public scrutiny can convince your sheriff
to lower fees.
In struggles to prevent foreclosures, advocates primarily target lenders
as the main culprits in callously causing losses of homes. These
struggles are right and good, but there are other folks out there who
are also contributing to home loss, and they are worth our attention and
action, too.
If you are a housing advocate and wish to discuss PUP's strategies for
confronting the sheriff and lowering his fees (if only temporarily, so
far), please feel free to contact me.
Shedding light on shady practices. Both articles today are doing just that. Nice work.
Posted by: Joe at August 31, 2006 12:08 PMthe sherriff's office in Philadelphia or anywhere else for that matter does not "sell your house from under you"....that would be the mortgage company or the municipality you owe taxes to ...the sheriff just facilitates the sale for the above mentioned...
Posted by: Karina at August 31, 2006 02:19 PMafter reading your article I have to disagree I am a invstor who attends Sheriff's sales and the properties are advertised in the Philadelphia Inquirer and Daily News along with various neighborhood papers and the paper the legal intellingencer
Posted by: missy at August 31, 2006 02:38 PMHere's a crazy suggestion -- pay your mortgage.
Posted by: The Don at August 31, 2006 03:45 PMI will help you let homeowners know that as soon as they know they will be late with a mortgage payment they should begin the dialoque with the mortgage company. That way they can avoid the added legal and Sheriff's fees. That will help lower foreclosure rates.
Posted by: Yvonne at August 31, 2006 05:10 PM It also helps to give people more time. In 2004, the
Philaelphia Unemployment Project got $800 lopped off a sheriff's fees
and bought homeowners 30 more days to come up with the lowered fee.
-There is a link between lowering the fees and giving people the chance of keeping their homes. Someone mentioned to just "pay your mortgage" and of course that is the ideal. But it comes down to community once again. (It always comes to that doesn't it?) If a few hundred dollars helps someone get out of a jam, then why not do it? What the blog is saying is that is has been done before, had a successful effect, and is now being rescinded. Why? Now, I am not advocating that people not pay their mortgages on purpose thinking they will get bailed out everytime. But this easy fix seems to speak to the principle of getting a hand up not a handout. The mortgage will still be payed, and the sheriff's dept is having a helping effect on the people they protect and serve. It sounds like a winner to me.
The thing about Philadelphia is that we have a high rate of homeownership among low-income people, which is a real virtue. That said, during economic downturns, people lose jobs and can't pay their mortgage. It isn't irresponsibility. It's bad luck. We saved the house of a family that had consistently paid their mortgage for 22 years before the father lost his job all of the sudden - a job he'd held 15 years!
Anyway, there is much more I could say about this, but the simple fact is that people, sadly, tend to wait too long to deal with their arrearage. Once it gets past judgement, a ton of fees get slapped onto what they owe the bank.
Every $100 those fees go up is that much more daunting for them to workout a way to keep their home. The Sheriff is adding 7 to 10 such $100's unnecessarily and that's no good.
More information our efforts with the sheriff can be found here, including two links to some informative articles from the City Paper.
http://www.philaup.org/testframe/foreclosure_campaigns.html
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