Published: December 14, 2009
DSNews.com

Congressman Fattah Wins House Approval for Emergency Mortgage Relief Plan

By Brittany Dunn

On Friday, the House of Representatives approved Congressman Chaka Fattah’s (D-Pennslyvania) $3 billion Homeowners Emergency Mortgage Assistance (HEMA) plan. Already a proven success at blocking foreclosures for unemployed homeowners in Pennsylvania, the plan passed in a vote of 223 to 202.

“We have tried everything else,” Fattah said in his statement to the House. “It’s time to get people’s mortgages paid directly and slow the pace of home losses that are destroying families and crippling our overall economy. It’s time to think outside the box about foreclosures and way past time to keep Americans inside their homes.”

According to Fattah, there is a broad agreement that a major threat to homeowners today is the loss of their home because of unemployment and job distress through no fault of their own. He said HEMA is a game changer, especially for struggling homeowners in cities and rural areas and for minorities.

Under the HEMA proposal, a lender must inform a homeowner in mortgage default about the HEMA plan before beginning foreclosure proceedings. A homeowner found eligible to participate in the program will then make partial mortgage payments to HUD instead of the lender. HUD then pays the homeowner’s entire monthly mortgage to the lender, provided that the homeowner has a reasonable prospect of resuming mortgage payments within 24 months.

The HEMA plan is modeled after the successful Pennsylvania program which Fattah took the lead in designing and guiding into law in 1983. Under that program, almost 43,000 home-saving loans were provided for jobless, foreclosure-threatened Pennsylvanians over the past 26 years. After noting the uneven record of other foreclosure mitigation efforts during the recent mortgage crisis, Fattah described the Pennsylvania success story as “tried and true, a successful program, not an untried idea.”

Legislation introduced by Fattah in 2003 marked the beginning of the road to enactment for a national HEMA program. In the 111th Congress, Fattah’s proposal was incorporated into H.R. 3766, known as the Main Street TARP Act. This act was introduced by Barney Frank (D-Massachusetts) chairman of the financial services committee, with subcommittee chairwoman Maxine Waters (D-California) and Fattah as original sponsors. Now, the proposal is incorporated into the Wall Street Reform Bill.

As a major provision in the Wall Street Reform and Consumer Protection Act (H.R. 4173), the HEMA plan is a broad overhaul of financial markets. It draws on unused funds in the Troubled Asset Relief Program (TARP) to provide a $3 billion pool for home-saving emergency mortgage loans for unemployed and financially distressed homeowners with prime mortgages. With wide ranging financial reforms, oversight, and consumer protection in addition to HEMA, the Wall Street Reform and Consumer Protection Act now moves to the Senate.

“We know that these kinds of loans can work,” Waters said. “Since 1983, Pennsylvania has run a very successful loan program — just ask Mr. Chaka Fattah — that has saved 42,700 unemployed homeowners from foreclosure.”

Fattah’s HEMA plan has drawn enthusiastic support from stakeholders. United States Conference of Mayors wrote all members of the House supporting the Wall Street Reform Act and specifically endorsed Fattah’s proposal as vital to the interests of cities.

“We also support the authorization of $3 billion in unspent TARP funds towards foreclosure mitigation,” said Tom Cochran, president and CEO of the Conference of Mayors. “The citizens of our cities continue to face losing their homes. Additional resources for foreclosure mitigation will strengthen the nation’s economy and our neighborhoods.”

Brian Hudson, executive director and CEO of the Pennsylvania Housing Finance Agency which oversees the program in the state, said at heart the HEMA plan is an unemployment program, and he believes Pennsylvania provides an excellent model for the nation by allowing homeowners to stay in their homes while jobs are being generated. Hudson said he joins other Pennsylvanians in thanking Fattah for his leadership in pushing the Pennsylvania model and for his long history of advocacy for emergency mortgage relief and affordable housing.

Additionally, Fattah was credited for plugging a hole in the mortgage foreclosure crisis by John Dodds, executive director of the Philadelphia Unemployment Project. As an advocate for Pennsylvania’s emergency mortgage relief program for the past 26 years, Dodds said he has worked long and hard with Fattah to deal with this problem.

“The majority of people going through foreclosure have prime — not subprime — mortgages, but have lost their jobs,” Dodds said. “They need emergency help to stay in their homes. His program takes our success story and applies it on a national scale during today’s economic hard times.”