Philadelphia's Mortgage Foreclosure Diversion Program: A Homeowner's Guide

By Stop Foreclosures PA • Updated July 17, 2026

Philadelphia's Residential Mortgage Foreclosure Diversion Program is a court-supervised process that requires lenders and owner-occupant homeowners to meet face-to-face at a conciliation conference — with free housing counseling — before a foreclosure can move to judgment. Created by the Philadelphia Court of Common Pleas in 2008, it has become a national model and has helped thousands of Philadelphia families avoid sheriff sale.

How the Program Works

When a lender files foreclosure on an owner-occupied Philadelphia home, the case is automatically routed into the Diversion Program and a conciliation conference is scheduled at City Hall.
You'll be connected with a free housing counselor (through the city's Save Your Home Philly Hotline, 215-334-HOME) who helps you assemble a financial package before the conference.
At the conference, you, your counselor, and the lender's attorney meet before a Judge Pro Tem to negotiate alternatives: loan modification, repayment plan, reinstatement, short sale, or a graceful exit.
The foreclosure cannot proceed to judgment while conferences continue — cases are frequently relisted multiple times while a workout is negotiated.

How to Get the Most Out of It

Show up — homeowners who attend their conference dramatically outperform those who default by ignoring it. Bring documentation (income, hardship letter, bank statements) prepared with your counselor. Be realistic about the numbers: if a modified payment is genuinely affordable, push for a modification; if it isn't, use the program's structured timeline to execute a sale on your terms rather than the sheriff's.

The program's greatest gift is time under court supervision. Every relisted conference is 30-45 more days to complete a modification, a HEMAP application, or a sale that protects your equity.

If Keeping the Home Isn't Realistic

The Diversion Program explicitly supports 'graceful exit' outcomes — short sales, deeds in lieu, and pre-sale closings. If the payment will never work again, tell your counselor you want to sell: the conference process will hold the foreclosure at bay while your sale closes. We regularly buy Philadelphia homes on exactly this path, closing before the case ever returns to the judgment track. Call (215) 392-8767 and we'll coordinate directly with your counselor's timeline.

Facing foreclosure right now?

We'll lay out your options — cash offer, creative finance, or as-is listing — within 24 hours, free and with no obligation.

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Frequently Asked Questions

What is the Philadelphia foreclosure diversion program?

It's a mandatory court program requiring a conciliation conference — a supervised negotiation between the homeowner and lender, with free housing counseling — before most foreclosures on owner-occupied Philadelphia homes can proceed to judgment and sheriff sale.

Is the diversion program mandatory in Philadelphia?

For lenders, yes: foreclosures on owner-occupied residential properties are automatically scheduled for conciliation, and the case can't move to judgment until the conference process concludes. Homeowners aren't forced to attend — but skipping it forfeits the program's protection.

How do I get a housing counselor in Philadelphia?

Call the Save Your Home Philly Hotline at 215-334-4663 (215-334-HOME). Counseling is free, and your counselor prepares your financial package and attends your conciliation conference with you.

Can I sell my house while in the diversion program?

Yes — a sale is a recognized 'graceful exit' outcome. The conference process keeps the foreclosure from advancing while your sale closes, and the payoff at closing ends the case entirely. This is often the best path for owners whose payments are permanently unaffordable but who have equity to protect.

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