Pa. emergency mortgage-aid program nearer reinstatement

The Homeowners Emergency Mortgage Assistance Program has moved one step closer to reinstatement with state House approval of a bill that would authorize for that purpose a part of Pennsylvania's share of a national financial settlement on foreclosure-processing abuses known as "robo-signing."

HEMAP, administered by the Pennsylvania Housing Finance Agency, was credited with saving up to 47,000 homeowners from foreclosure over more than 27 years in existence, but as a result of budget cuts, the program ended July 1. Ending at the same time was the Act 91 requirement that defaulting borrowers be sent notices by lenders informing them of the program and available counseling.

For part of 2011, the federal Emergency Homeowner Loan Program, which was modeled on HEMAP, funded loans to help distressed borrowers. But that program, funded by the U.S. Department of Housing and Urban Development, ended Sept. 30, after approving 3,056 Pennsylvania homeowners for emergency help, according to the state Housing Finance Agency (PHFA).

The House vote in Harrisburg on Monday was 197-0. The bill, SB 1433, now returns to the Senate, which must concur with the House version. If the Senate approves it quickly, PHFA says, it expects to resume taking HEMAP applications in early July.

The bill originated in the Senate, where it was approved unanimously, as well, after housing advocates across the state lobbied to underwrite HEMAP through the $66 million received by Attorney General Linda Kelley as part of the "robo-signing" settlement with five major lenders.

Forty-nine states received shares of the $25 billion settlement reached with the lenders after it was discovered that foreclosure documents had been submitted for action without being read before they were signed. In each state, the attorney general received direct payments of portions of the settlement to fund consumer-protection and foreclosure-protection efforts.

About 90 percent of the $66 million would be used for HEMAP, which provides loans to borrowers behind on their mortgages, to be repaid either when their financial crises end or within 24 months.

The rest would go to legal assistance and consumer-protection programs established by Kelley's office.

The money would be used over the next five years, which Philadelphia Unemployment Project director John Dodds said was a concern for the 80 organizations that make up the Pennsylvania Save Our Homes Coalition, which lobbied for the funds.

The legislation stipulates that no more than $12 million be distributed from the settlement annually for HEMAP. An additional $6 million would be appropriated immediately for the program to address a backlog of new clients needing the assistance.

Dodds said the coalition had asked the bill's prime sponsor, State Sen. John Gordner (R., Columbia), to try to ensure that more money could be made available to PHFA in a year with an unusually high rate of foreclosures, rather than spreading it over a longer period, when the situation might not be as critical.

In 2010, the last full year HEMAP was in operation, 13,654 homeowners applied for the assistance, and 2,798 applications were approved.

In February, a research brief published by the Reinvestment Fund showed that from 2008 to 2010 HEMAP saved more than 6,100 homeowners from foreclosure. Had the program not existed, the report said, "Pennsylvania's foreclosure rate would have been higher and its rank among states several rungs worse. "

According to the report, the number of homes saved amounted to 4.6 percent to 5.1 percent of the state's total foreclosure inventory.

Since the federal loan program concluded in September, Pennsylvania has experienced an uptick in foreclosure filings. HEMAP supporters have attributed the increase to the end of the emergency loan program and the Act 91 notification process.

RealtyTrac, which tracks such data nationwide, reported that foreclosure filings in the state increased 55 percent in the first quarter of 2012 compared with the same period in 2011.

First-quarter foreclosure sales in Philadelphia totaled 922 houses, the highest number in the five years since the region's housing bubble burst in August 2007.