Philadelphia's effort to help city homeowners avoid foreclosure is catching attention, and among those watching are Mayor Michael Bloomberg of New York.

Bloomberg invited Mayor Nutter to the Big Apple today to explain Philadelphia's Foreclosure Diversion Program at a morning conference at the Legal Aid Society Queens Neighborhood Office in Kew Gardens.

On his way from New York back to Philadelphia, Nutter joined a 3 p.m. teleconference call hosted by the U.S. Conference of Mayors and the Washington-based nonprofit Association of Community Organizations for Reform Now (ACORN). Nutter and his program won praise from mayoral heavyweights that included Manny Diaz of Miami and Antonio Villaraigosa of Los Angeles.

About 60 percent to 65 percent of 5,200 homeowners in foreclosure in Philadelphia since June 2008 have negotiated with their lenders for new payment terms, according to Nutter's spokesman Luke Butler. Of those, about 1,200 kept their homes and 1,500 continue to negotiate.

In contrast, fewer than half of New York's foreclosure-threatened homeowners have negotiated for new terms on their mortgages, according to aides of Bloomberg.

In Philadelphia, the court system, which oversees the program, will not approve the sale of a home in foreclosure unless lenders and creditors have tried to negotiate new terms.

Nutter said in the call that the city contributed "in excess of" $2 million to fund its program. Nutter had said Feb. 3 that Philadelphia raised more than $275,000 in private donations for the campaign.

Jean Ruffin, 75, was a Philadelphia homeowner who benefited. When her lender filed in 2008 to foreclose on her mortgage, the court gave Ruffin's address to ACORN, which sent a representative to Ruffin's door and explained her options. A volunteer lawyer argued on Ruffin's behalf.

"They had me telling my story," said Ruffin, who kept her home.

Bloomberg said he believed not enough New Yorkers understood their lenders' notices about meetings to settle payments. Sometimes homeowners mistake such notices for junk mail, his administration said in a statement. On the other hand, the statement explained, lenders do not send representatives to settlement meetings that have the authorization to approve changes to loans.

Legislators in New York and Pennsylvania are boosting foreclosure-diversion programs. New York State Sen. Jeff Klein and Assemblyman Hakeem Jeffries announced legislation last month aimed at helping homeowners renegotiate their debts. And State Rep. Michael McGeehan (D., Phila.) introduced a bill in March that would expand Philadelphia's mortgage program to the rest of Pennsylvania.

Banks are not opposed to negotiations, especially in today's tough market.

"If it's part of an overall process that brings all parties to the table to create a solution, it's probably a good thing," said Robert Rupel, chief executive officer of Lafayette Ambassador Bank, which is based in Easton, Pa. "If it's another tactic to delay an already cumbersome and lengthy process, then we're not in favor."

Contact staff writer Sonja Ryst at 215-854-2614 or Sryst@phillynews.com.