* NYC, Los Angeles, Miami, St. Louis, Oakland involved
* Plan based on program in Philadelphia
By Jon Hurdle
PHILADELPHIA, June 11 (Reuters) - Mayors from five U.S. cities called on Thursday for states to pass laws that would require mortgage lenders to negotiate with borrowers who are threatened with foreclosure.
The mayors of New York City, Los Angeles, Miami, St. Louis and Oakland, California, said mandatory mediation offers the best hope of stemming a national foreclosure crisis that led to an 18 percent surge in foreclosure filings in May compared with a year earlier.
The mayors aim to follow up on a year-old program in Philadelphia that brings lenders and borrowers together under court supervision, and has allowed more than 70 percent of participating homeowners to remain in their homes.
“Many local governments are turning to the Philadelphia model,” Bertha Lewis, chief executive of Acorn, a national community organization that has been active in trying to curb foreclosures, told reporters during a conference organized by the U.S. Conference of Mayors.
While Philadelphia has been able to implement its mortgage foreclosure protection plan unilaterally, other cities represented on the call would need a change in state law to implement such a program, said Elena Temple, a spokeswoman for the mayors’ organization.
Philadelphia Mayor Michael Nutter said 3,380 homeowners in the city have participated in the program and 1,200 have saved their homes through renegotiated loans or agreements on payment arrears. Another 1,500 are in negotiation.
The total number of Philadelphia foreclosure filings since the program began in early June 2008 was 5,200, of which some properties were vacant, some owners filed for bankruptcy, and others hired their own lawyers rather than participating in the city program, officials said.
Cities also hope to emulate Philadelphia’s outreach efforts in which officials go door-to-door informing homeowners faced with foreclosure that they may be able to save their homes through the program.
Nationally, 321,480 properties, or one in every 398 houses, were in some stage of foreclosure in May, the RealtyTrac organization reported on Thursday. That was 6 percent below April’s level but the third-highest on record.
Miami Mayor Manny Diaz said foreclosures in Miami-Dade County doubled in both 2007 and 2008, and were more numerous in the first quarter of 2009 than in all of 2006. “If we don’t stem the tide of this foreclosure crisis, it isn’t going to get any better any time soon,” he said.
New York City Mayor Michael Bloomberg said he was optimistic that the New York State Assembly would enact legislation to make mortgage mediation mandatory.
Bloomberg said at a news conference on Thursday that current state law allows homeowners with subprime mortgages to negotiate modified loans but that less than half of such borrowers in New York City take advantage of that opportunity. (Additional reporting by Michelle Nichols; Editing by Bill Trott)