Philadelphia suspends sales of foreclosed homes

By Jon Hurdle

PHILADELPHIA, March 28 (Reuters) - Authorities in Philadelphia will suspend foreclosure sales of homes whose owners have fallen behind on adjustable-rate subprime loan payments -- potential relief for tens of thousands of struggling debtors.

Sheriff John Green said he would halt sales of foreclosed properties in April and would seek a court order extending a moratorium for an unspecified period.

His action follows a nonbinding resolution passed unanimously by the Philadelphia City Council on Thursday calling on Green to stop the sales to give borrowers more time to seek a settlement that would prevent them from losing their homes.

ACORN, an advocacy group for low-income families, said 45,470 subprime foreclosures are expected across Pennsylvania between third-quarter 2007 and the end of 2009.

Green, the sheriff of Philadelphia city and county, is trying to identify and track homeowners with weak credit histories who took out the loans with initially low repayments but who are no longer able to afford them because their rates have adjusted sharply higher.

Such loans are expected to lead to a flood of foreclosures throughout the United States this year, and have led to severe losses among financial firms trading in securities backed by the mortgages.

"Given the severity and complexity of mortgage foreclosures, a moratorium will allow for more time to identify and help distressed home owners," Green said in a statement.

The resolution said 3,206 "high-cost" mortgage loans made in 2006 are likely to go into foreclosure in Philadelphia, representing losses totaling $345 million to homeowners, lenders, local government, and falling home values.