PHILADELPHIA (CBS) — Philadelphia weathered the mortgage foreclosure crisis, but advocates say a new crisis is looming — this one caused by the city itself.
Tax foreclosures: they’ve spiked 1,200% in the last seven years, according to Monty Wilson of Community Legal Services. Wilson testified at a city council hearing on a bill that would create a foreclosure diversion program for homeowners behind on their taxes.
“We recognize that the city needs this money to provide services and funds for our schools,” Wilson said. “At the same time, however, Mayor Kenney and City Council must recognize the impact this has on the most vulnerable homeowners.”
One of those homeowners also testified. Rocco Labrosciano, a disabled crime victim living on $735 a month nearly lost his home to tax foreclosure.
“I tried everything in my power to do everything that I can,” he said, “but it doesn’t cover everything.”
His home was saved by CLS. Wilson notes if it hadn’t been, Labrasciano would have been forced into the shelter system.
“Mr. Labrasciano would have cost the city $14,600 annually,” Wilson explained. “That’s a net loss to the city of $8,000.”
The spike in tax foreclosures has not hit everyplace in the city equally. Public interest lawyer Irwin Trauss says 84% are occurring in minority communities.
“People are falling through the safety net because they are infirm, elderly or otherwise vulnerable,” Trauss said.
Trauss says they’re losing their homes to satisfy relatively low tax balances and often those homes are sold for a fraction of their market value.
“The city of Philadelphia, unintentionally, I’m sure, is acting as an agent for the transfer of wealth from our minority communities and our minority homeowners to speculators,” he said.
Trauss says the bill will help the city make sure it’s tax collections are in line with its policies of ending homelessness and promoting home ownership.
Revenue Commissioner Frank Breslin stressed that residential property is only 4% of delinquent tax collections but agreed the bill would help protect vulnerable homeowners. It passed the committee unanimously.
The bill now goes to the full council.