Lehman's collapses. Merrill is absorbed. Bear Stearns goes belly up.

Investors scramble. Banks hoard. Wall Street stresses.

Fannie, Freddie and AIG all beg for bailouts. And the reluctant buyer at this frantic fire sale? Every day, our own government seems to spend more and more money it doesn't have.

Even though one agent for change still thinks the fundamentals of the economy are sound, it didn't take screaming headlines for folks like you and me to know that we've been in a mess for a while now.

The crisis has been felt at home - literally.

Caused in part by buck-wild lenders with no one to control their greed, offering adjustable-rate subprime mortgages (in other words, a payment that's guaranteed to escalate) to hardworking folks who thought they finally had a shot at the American dream.

Only to have it threatened by a foreclosure notice.

Ground zero of the financial crisis is spread across neighborhoods all over Philadelphia, where foreclosure filings rose last year to more than 6,000, up 18 percent from the previous year.

It's not surprising that residents of minority neighborhoods are three times more likely to receive subprime mortgages.

And, worse, 40 percent of predatory loans go to senior citizens.

But amid the crisis, Philadelphia - unlike Wall Street - has made one very smart investment.

With help from the new Mortgage Foreclosure Diversion Pilot Program, created by the Court of Common Pleas in partnership with the Nutter administration, City Council, the Philadelphia Sheriff's Office and the Association of Community Organizations for Reform Now (ACORN), homeowners can finally have a chance at a little peace of mind.

Unlike any other

The program, which officials say is the first of its kind in the nation, works to reduce the number of homes threatened with sheriff's sales by connecting a judge with homeowners and lenders to attempt an affordable restructuring of their loans.

"Lenders lose a lot of money on foreclosure, the homeowners lose, and all the people who live around that vacant property lose," says Ian Phillips, legislative director for ACORN. "We look at the financials of a person to determine affordability. We're not trying to give people miraculous interest rates. . . . But the judge has put in an expectation of reasonableness."

By any measure, the program has enjoyed success. Since its March launch, his team of community organizers - yes, community organizers - has reached out to 700 homeowners, literally going door-to-door seeking out those who might be in danger of losing their homes.

Of the 140 cases that went through negotiations, 81 have settled, 53 have pending agreements, and six are still being negotiated. And yesterday, Phillips took a busload of homeowners to Harrisburg to push for statewide implementation of the program.

Had it not been for ACORN, Jean Ruffin's house, long paid for, would have been up for sheriff's sale - and there's no telling where Ruffin, her children, her grandchildren or great-grands would have gone.

"Oh, honey, that didn't make me feel so good," says Ruffin, 74, recounting her nightmare in her rowhouse on North Cleveland Street in North Philly, where she's lived for 56 years. "Where was I going to go? The family gets split up and everybody goes different places. . . . That's not a good feeling."

In 2000, Ruffin needed siding for the back of her house. She thought she was agreeing to a payment plan when she signed a contract for the $9,000 job, which she intended to pay off in monthly payments of around $150.

What the widowed, retired housekeeper didn't realize was she had taken out a home-equity loan on her house - in essence, a second mortgage.

When it was all said and done, her loan totaled more than $27,000.

"Seems to me like they didn't mention nothing about no mortgage," says Ruffin, who suffers from cataracts in both eyes, so advanced she has to feel around for the telephone in front of her. "I thought I was signing [a payment plan]."

By 2004, her payment had doubled, straining her $795 monthly Social Security check. She tried to contact the company, which refused to work with her.

This year, she received a foreclosure notice.

Having heard about the Mortgage Foreclosure program through a neighbor, she sought help.

"ACORN worked with me beautifully," Ruffin said. "They were determined to help me. And they did everything they could. I didn't have to pay them anything."

The city foreclosure program got GMAC to forgive the loan entirely.

Not only did it help Ruffin, it helped save her block, an abbreviated stretch of worn rowhouses that struggles to maintain the dignity it once had.

One more vacant house would just help further unravel the block.

For her part, Ruffin is determined not to make the same mistake again.

"I don't sign anything no more," she insisted. "They think a lot of citizens are widows whose husbands died and left them a pile of money."

"There's a lot of history in this house with my grands and great-grands. That's why I was praying to God I could save this house. . . . And, thank God, I did."

Annette John-Hall: More Information

To learn more about the Mortgage Foreclosure Diversion Pilot Program, call 215-334-4663 (HOME).

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