Roughly 85% of borrowers participating in a Philadelphia foreclosure prevention program, which mandated a face-to-face meeting with their servicer, are still in the homes since reaching an agreement with the bank in 2008. A study conducted by the Regional Housing Legal Services and May8 Consulting showed 27% of at-risk homeowners lost their homes to foreclosure in 2008, which would be 10% more than the following year. The study was released Wednesday at a forum sponsored by the Federal Reserve Bank of Philadelphia. In the April 2008, the city Court of Common Pleas ordered the homeowner must meet with the lender or servicer in a court-supervised setting to negotiate an agreement. The initiative was called the Diversion Program. Before, homeowners could only apply for a bridge loan under the Homeowner’s Emergency Mortgage Assistance Program, or HEMAP, which was the basis for the nearly expired national Emergency Homeowners Loan Program launched this year. Roughly 11,200 of the Philadelphia homeowners targeted by the Diversion Program took advantage of it from April 2008 through May 2011, a participation rate of 70%. That’s double a similar mediation initiative launched in Cleveland. “Unlike in traditional mediation, which handles each individual case separately, the sheer size of the court’s caseload required an environment in which hundreds of cases could be negotiated in a single day,” according to the study. An average of two conferences are held per homeowner over an average of 54 days. Roughly 35%, or 3,900 homeowners reached an agreement with their servicer. Of the 1,000 who reached an agreement in the first year of the program, about 850 were still in their homes as of May. Mediation programs began sprouting up all over the country as the foreclosure crisis took hold in 2008. Legislation is currently pending in the Senate to require it nationwide. In Springfield, Mass., lenders who fail to provide such a session to at-risk homeowners face penalties as high as $30,000. However, extended foreclosure timelines continue to haunt an industry inundated with millions of distressed loans. According to Moody’s Investors Service, the timeline from default to liquidation rose to 24 months this summer from 14 months in 2009. Since 2008, Philadelphia has spent roughly $3 million on foreclosure prevention assistance. Through the Diversion Program, the average cost to save a single home from foreclosure was $3,310. While other cities are struggling to correct budget deficits, the Philly Fed researchers said the cost can be worth it for other places to adopt a similar streamlined and transparent process. “The Diversion Program’s emphasis on hundreds of negotiations occurring simultaneously in a courtroom environment offers an approach that can be implemented in cities with significantly higher foreclosure rates,” according to the report. “Other jurisdictions will benefit from the study’s explanation of what Philadelphia has done well and what Philadelphia can do better to prevent more foreclosures and increase transparency in the process.” Write to Jon Prior. Follow him on Twitter @JonAPrior