Behind my home there is a burned out shell. A family of possums, several dozen pigeons and an occasional raccoon call it home. Before the fire a few years ago a very nice family called it home. It was a rental property and in the fire the family lost everything. It turns out that their landlords, who lived in a well to-doish part of Montgomery County had gerry-rigged a decidedly unsafe kitchen in the former dining room to avoid dealing with some minor structural problems in the back room where the "old" kitchen was. Exposed wires, a propane fueled make do range set up on raw plywood - a fire danger waiting to happen for several years that finally did consuming a family of fours entire possessions. Luckily noone was seriously injured. Several neighbors on the block have asked about the property, what to do about gaping holes in all the windows, etc. Investigating the property on the BRT website the landlords had not paid property taxes for 12 years prior to the fire and certainly not paid any in the 4 or 5 years since the fire that the house has sat empty.

Tracking down the landlords via information on the BRT site, they weren't necessarily bad people, though they obviously had set up an unsafe condition for their tenants and in my mind bear the main responsibility for the fire and the risk to their tenants lives. Adult children of an elderly grandmother who had long since moved out of the neighborhood from a neighborhood that saw a serious downswing in the late '80s and 90's under the reign of crack and more recently a new but serious upswing. Calling repeatedly to inquire about the status of the property, various adult children and boyfriends would always say "You need to talk my mother" take down the information and then never call back. Eventually the number was disconnected and googling the address in MontCo it turns out after being only a few years tax delinquency on their home in the burbs, the MontCo house had been sold at a tax foreclosure auction with no forwarding information for the former landlords. There is no sign that shell will ever go up for auction to a possible rehabber (which in my opinion could be done profitably at current housing prices despite the fire damage) to recoup whatever uncollected taxes here in the city they could.

I take this little detour because its an example of the gray area that many of the properties that fall through the cracks of the city's longtime defacto policy of not collecting property taxes fall into - how the policy helps situations that should have not gotten as bad they do fester and become small catastrophes. I'd argue that the tenants, the landlords, Philly's schools and my neighborhood would all have been better off if the city had intervened earlier - given the landlord's a financial incentive to do some hard thinking about their attachment to a house none of them had seen in years and that all they could do to maintain was hire the worst unlicensed handyman they could find to set up a dangerous unsafe kitchen.

When people talk about property taxes people rarely talk about these muddled gray areas. Its usually black or white. You either are on the side of seniors on fixed income on the verge of being forced from their home or you are (like the role I sometimes play) complaining about the hundreds of deadbeat real estate specualtors and horrible, horrible absentee landlords getting a free ride. Because of the divide, dialog on the topic is often broken and clear and simple policy solutions get passed over again and again.

For example in today's Inquirer:

For a city and nation in the grip of the home-foreclosure crisis, Barbara Pearsall's situation seems like a familiar one: She is hopelessly behind on her bills, and barring some sudden financial windfall, the recovering stroke victim will lose her small South Philadelphia rowhouse in a matter of months.

But it's not a big mortgage lender that would turn the 67-year-old Pearsall out of her house. It's the City of Philadelphia.

City Hall is in the midst of an aggressive crackdown on tens of thousands of real estate tax delinquents. Those who won't or can't pay - like Pearsall - are losing their properties, to the tune of more than 100 tax-foreclosure filings a month.

The city has every legal right to seize the land of those who haven't met the most basic of civic responsibilities. And the collective debt the delinquents owe is massive: about $290 million, money the city and school district badly need.

Yet by getting tough at a time when mortgage foreclosures are hitting Philadelphia hard, the city runs the risk of putting further stress on already shaky neighborhoods.

One standard response is "the city should not collect the taxes because foreclosing on properties in shaky neighborhoods makes things worse"

"What the city is doing doesn't make sense. Market values are tumbling, homes are being boarded up, neighborhoods are being disrupted," said Irwin Trauss, an attorney with Philadelphia Legal Assistance who runs the city's mortgage-foreclosure hotline.

"The city ought not be adding fuel to this fire. The city ought not be taking this opportunity to collect its debt, certainly not from low-income folks, by selling people's houses and making them homeless."

But I would argue that not collecting the taxes for so long has in the instance of the house behind me has in its own way poured fuel on the fire: underfunding our schools, reducing the number of up-to-code safe rentals on the market, helping to build blight.

The city's response:

The city promised an extensive safety net for low-income homeowners when the stepped-up collection program was introduced. There was to be a $1 million loan fund, and $500,000 more for tax-foreclosure housing counseling. Neither materialized.

"The safety net doesn't exist," said Monty Wilson, an attorney for Community Legal Services who has specialized in tax-foreclosure cases.

The Nutter administration disputes that, but Pritchett acknowledged the city had not done everything Street promised. The difficulty, he said, is that the prior administration did not set aside enough money to meet the promises.

The city does offer payment plans to delinquent low-income taxpayers, which Pritchett said was perhaps the most important part of any safety net.

But attorneys such as Wilson say the agreements are part of the problem. Those who sign up, Wilson said, waive their due-process rights, in essence giving the city permission to take their homes without notice or the right to a court hearing if the homeowner misses so much as a single payment.

"It would be a national scandal if the mortgage companies tried to do what the city is doing," Wilson said.

City officials dismissed Wilson's concerns, suggesting he was misinterpreting the agreement's language.

"Community Legal Services is wrong," said Cynthia White, chief deputy city solicitor. "This is an agreement we've been using for 25 years."

In practice, White said, the city is highly accommodating to low-income homeowners who have signed payment agreements. Fine, Wilson and CLS respond, then change the agreement language to better reflect that.

Now here's the problem, without taxes to fund L&I inspectors or social workers or education programs to reach out to homeowners starting to get in a pinch before it hits a crisis the city is definitely running the risk of putting lots of homeowner's in dire straights.

The thing thats craziest about the predicament is the city already has a model praised for how it should be dealing with its own tax foreclosures based on its recently passed mortgage foreclosure laws. Why aren't we doing this already? I would submit - the "divide".

What really worries community lawyers, however, are homeowners like Pearsall, who sought help just a little too late.

Pearsall inherited her modest brick rowhouse from a sister around 1980. Undereducated and unemployed, Pearsall said her average monthly income was $500, all of it public-assistance money. On that she raised three children and three grandchildren.

"I didn't have the money," Pearsall said. "I didn't have the money for the taxes. And I didn't pay them."

By last year, she owed the city $27,000, and the foreclosure warnings were arriving in the mail at a furious pace. She sought help in November, but it was too late. Her home was sold at sheriff's auction days later.

Pearsall still lives there, but her time is running out. The redemption period, in which she can get her home back (by making good on her debts, plus interest, rent and attorneys' fees), ends in December.

Monty Wilson, who now represents Pearsall, says it all could have been avoided. If the city did for her and other tax delinquents what it does for those with mortgage trouble, Pearsall would still have the title to her home, Wilson said.

The city's new and innovative mortgage program, which was featured in a Wall Street Journal front-page story earlier this month, mandates that no home can be auctioned without a court-mediated conciliation session between the homeowner and the lender. Had Pearsall had access to the same program, Wilson said, she could have signed on to a payment plan, or gotten a reverse mortgage to make good on her debts.

Pritchett, the mayor's policy adviser, says it's an idea worth considering.

"But let's remember the big picture, which is that there are many people in the city who can pay their taxes who aren't," Pritchett said.

He is no doubt right about that. Many of the deadbeats are thought to be absentee landlords or speculators. Others are regular folks who haven't paid because, until now, there were no consequences. And these aren't property owners who are past due by a few months. Most haven't paid their taxes in years, or even decades.

But it is also true that there are low-income homeowners, largely elderly and on fixed incomes, who are now squarely in the city's tax-collection sights. Exactly how many is impossible to say, however. White said the city didn't even keep track of which delinquent homes were occupied by their owners, much less their household incomes.

In a few months, the city's contract with the Texas-based tax-collection firm Lineberger, Groggan, Blair & Sampson will expire. The city is using the opportunity to think about changing its approach, Pritchett said.

"We are going to do an evaluation of exactly what the new contract will look like, who they'll go after, what kind of people should we be targeting," Pritchett said. "We'll ask if in light of the change in the economy should we maybe have a different approach."

For many homeowners caught in a pinch "a few months" is too late.

So that my pitch for a "middle ground" on smart property tax policy. I might go a step further and say we should make a serious case for suspending tax forclosures (on owner occupants only) till a decent well-funded program for mediation was put into place.

Sometimes a "middle path" is the way to go. Others here may differ.

Judge Darnell Jones anounced an innovative plan to stem foreclosures in Philadelphia Wednesday. Philadelphia homeowners will have a chance to modify the terms of sub-prime and predatory loans so that they can again afford the payments. It's a modification, not a re-finance, which means that they don't have to reapply or accrue new settlement fees. The lender simply agrees to lower the interest rates and change the terms on the existing mortgage. The deal only applies to owner-occuppied residences. It also only applies if the owner-occupant takes advantage of the court-mandated opportunity to meet with attorneys for their lender within 45 days of the foreclosure filing. If they don't, foreclosure will proceed like it always does.

In Harold Brubaker's story on the deal in yesterday's Business Section of the Inquirer, Tobi Walker of the Pew Charitable Trusts said, "This is one of the more innovative approaches we've seen."

The situation for lenders has been bad enough that they have been willing to pursue modifications with homeowners, but the process has been so cumbersome that many homeowners have still lost their homes because the foreclosure moved faster than lenders' workout staff could get through the volume of cases. Philadelphia advocates had a key insight: we have a large workforce of housing counselors available and willing to manage the lion's share of the modification process, if only the lenders would agree to give them that authority. Now, the court is requiring it.

Common Please Court has made this happen procedurally. It now simply requires lenders to give homeowners the opportunity to modify loans before permitting a foreclosure to go forward in court. There's no case or decision to look up. The court has simply changed the way it conducts the business of foreclosure.

Here's how it happened: late last year The Philadelphia Unemployment Project began calling Philadelphians holding mortgages through Countrywide. We invited them to meet as a group with our housing counselors, discuss their options as individuals and ask them to join with us as a group to press for a better deal through our Foreclosure Crisis Committee. Then, in December, the Save Our Homes Coalition convened in the PUP offices. Community Legal Services, ACORN, Philadelphia Legal Assistance and various Housing Counseling Agencies from around the city.

Meanwhile, the whole economy began teetering badly as the collective misjudgement of America's housing market by the world financial industry became apparent. Click read more to find out the rest of the story.

Today the Federal Reserve cut interest rates by .75 of a percentage point. Everywhere you look, the subprime lending crisis appears to be hurtling the US into a recession. Newspaper stories talk about cities having to deal with epidemics of foreclosures. While all of this is true, the whole thing is a useful exercise in looking at where the media priorities of the big national newspapers lie. Because, while cities across the Country are certainly experiencing high levels of foreclosures, in reality, they are not much higher than they have been for years. In other words, yeah, subprime lending is hurting us, but, it has been hurting us for plenty long before now.

One way to measure foreclosures is to look at foreclosure filings per 1000 owner-occupied homes.

These are the rates of foreclosure in Philly per 1000 owner-occupied homes (2000-2003 numbers here):

2000: 14.6
2001: 17.1
2002: 18.2
2003: 18.1
2004: 16.1
2005: 15.9
2006: 16.4

I don't have 2007 numbers, but, I suspect they will not be higher than 2002-2003, when the wild-wild west world of 1998-99 loans were all coming through the foreclosure pipeline. Does that mean Philly is not hurting? Certainly not. But simply, it is nothing new. For example, in 2005, I rode around Philly with a reporter who wrote this:

PHILADELPHIA -- To walk Thayer Street in northeast Philadelphia is to count, door by door, the economic devastation afflicting a working-class neighborhood. On a single block, 18 of the 42 brick rowhouses have gone into foreclosure in the past three years.

There's Marciela Perez, who fell ill with cancer, lacked health insurance and stopped making mortgage payments. Barrel-chested Richard Hidalgo, who got divorced and could no longer make his monthly nut. And Mike O'Mara, a rawboned and crew-cut truck driver who took on too much debt, lost his job and fell behind on his mortgage.

"Mortgage companies convinced us to refinance, and each time our bill went up," O'Mara said as he surveyed his narrow street from his shaded front porch. "You fall behind and they swoop down on you."

Philadelphia, its suburbs and indeed much of Pennsylvania have experienced a foreclosure epidemic as low-income homeowners take on mortgage debt they cannot afford. In 2000, the Philadelphia sheriff auctioned 300 to 400 foreclosed properties a month; now he handles more than 1,000 a month. Allegheny County, which includes Pittsburgh, had record auctions of foreclosed homes, and officials speak of a "Depression-era" problem. The foreclosures fall particularly hard on black and Latino families.

In a TRF study on Predatory Lending (full disclosure: I worked on both reports), for example, one neighborhood that was closely examined- Harrowgate- had about 173 foreclosures per 1000 owner-occupied properties for the years 2000-2003. To me, at least, that is a stunning amount of foreclosures, and we are talking about a time period from up to eight years ago.

Because of the advocacy community in Philly- groups like PUP, CLS, ACORN, etc., because of a progressive minded Secretary of Banking under Rendell, because of having TRF located in Philly, because of the Daily News and Marian Tasco taking on predatory lending in... 2001, this really, truly, is nothing new. Yet, to read the New York Times, this phenomenon is like nothing before.

Part of this is that the pain of subprime lending is reaching new communities, and that the Wall Street house of cards is falling, so it is having a more mainstream effect. However, even that could have been forecasted, considering that it has long been routine for the biggest subprime lenders to go out of business after ravaging communities. The difference now is that mainstream lenders- Countrywide, Citi, etc., and mainstream investors- Bear Sterns, Morgan Stanley, etc have woven themselves deep enough into the morass, that just about everyone is paying attention.

However, for the average Philadelphian, has much changed? No. The crisis that we had before is the same crisis we have now. The only difference is now, the national media is 100 percent fixed on the problem.

But, Philly still has a great predatory lending bill on the books. All that would have to happen for it to take effect would be for Dwight Evans and Vince Fumo to undo Act 55- the State preemption bill. What do you say, fellas? Want to undo some of the damage you wrought?