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.