Published: March 2, 2010
Patriot-News Editorial

Pennsylvania deserves piece of mortgage-assistance pie

When a for sale sign goes up in front of a home these days, sometimes you wonder whether there is a foreclosure story behind it.

Last year in Pennsylvania, 153,239 notices went out about potential foreclosure actions, according to figures from the Pennsylvania Housing Finance Agency (lenders are required to notify the group when they are about to start a family on foreclosure proceedings).

Some of those were refinanced or reached another kind of settlement before a family was forced to move out, but close to a third entailed the end of someone being a homeowner last year.

President Obama and Congress have faced a lot of heat over being quick to bail out Wall Street while foreclosures rocked Main Street.

As the president rightly said last month, “There’s not enough money in the Treasury to stop every foreclosure. And we shouldn’t be using tax dollars to reward the same irresponsible lenders or borrowers who helped precipitate the crisis.”

But not all mortgages were issued under wild circumstances, and watching neighbors who are a few payments behind because of being out of work lose their homes is hard on everyone on the block emotionally and financially.

Recently in Nevada, the president proposed a $1.5 billion program to stem part of the foreclosure tide.

The money would come from the repaid TARP funds from big banks, and it would mainly be loaned out as bridge loans, which means the money would be repaid. The program is modeled after Pennsylvania’s Homeowner Emergency Mortgage Assistance Program.

In the last big recession in 1983, Pennsylvania’s Legislature was visionary enough to found HEMAP. The group makes small loans — typically around $10,000 to $15,000 over a course of several months — to families on the verge of foreclosure. The money is repaid at a rate of 5.25 percent.

Through the years, HEMAP has saved more than 80 percent of the families it works with from foreclosure. Much like microfinance, the repayment rate on the loans also is high. In fact, HEMAP now funds half of its operations from the capital that is returned.

The bad news is that the federal government is about to hand out $1.5 billion to states for mortgage assistance, but despite our flagship program, Pennsylvania isn’t slated to get any of that. It is going to be targeted to only five states.

Our U.S. senators and congressional delegation should press to see the federal funding more widely distributed.

On the state level, our Legislature should continue its commitment to funding HEMAP. Applicants to the fund have doubled since the crisis started. The $11 million allocated last year assisted thousands of families on the front lines who were trying to get by. It’s a small investment that is paying real dividends for families as well as the neighborhoods they live in.