DN Editorial: House help dies: Pa. kills foreclosure loan program

DURING the endless weeks Congress has spent debating the abstractions of the debt ceiling, homeowners around the city and state have confronted a far more real ceiling crisis: the loss of their homes through foreclosure.

A recent report by Realty Trac, which monitors real estate and foreclosure data, may seem like good news but is actually bad: Foreclosures are down but mainly because of processing delays at the banks, which are drowning under huge inventories of foreclosed homes. In the first six months of this year, "only" 1.2 million homeowners got a foreclosure filing - 30 percent less than in 2010.

Until recently, Pennsylvania homeowners were a little more fortunate than those in other states, since both the state and the city have offered innovative foreclosure programs.

For example, the city created a much-copied mortgage-mitigation program administered through the courts that encourages lenders and borrowers to create mortgage payment plans that give homeowners a chance of saving their homes.

And for the past 25 years, the state's Homeowner Emergency Mortgage Assistance Program (HEMAP) has been a national leader by giving loans to unemployed homeowners to help prevent the loss of their homes. It has helped save 45,000 homes.

Unfortunately, the state killed that program last month, another victim of the state budget cuts. The state had spent $10 million on the program the previous year; it cut that to $2 million, which was not enough to save the program.

And although the state budget cuts haven't been pleasant for many, especially lower-income residents, the foreclosure of the HEMAP program seems not only cruel, given the unemployment rate, but particularly counterproductive. For one thing, the low-income loans provided to homeowners who lost their jobs had a high rate of repayment; repayments were used to grant additional loans to other homeowners, so the program helped fund itself. The program was recently singled out as a model by the New York Federal Reserve.

Why should we care about the homes of people who've lost their jobs? As far too many have learned, the devastation of foreclosure affects far more than a family that loses its home. Foreclosures destabilize streets, neighborhoods and communities, by affecting property values.

The state saw an influx of federal funds for HUD's Emergency Homeowners' Loan Program (EHLP), but those expire Sept. 30.

After that, all help ends. The Pennsylvania Save Our Homes Coalition is advocating for restoring the state funds, using some of the state's budget surplus. That would be a wise investment.

Meanwhile, those in trouble do have options - call the Pennsylvania Unemployment Project (215-557-0822) or Consumer Credit Counseling Service of Delaware Valley (215-563-5665).