Federal program vows to fight foreclosures

By Eric Mayes

James Tyson never expected he’d need help paying his mortgage — he’d spent nearly 20 years in the mortgage business. But after that industry was rocked by the economic meltdown, Tyson suddenly found himself unemployed.

Now, the 50 year-old has been jobless for about a year, and he’s eight months behind on payments for his West Philadelphia home.

“I was doing mortgages for a residential mortgage business,” he said. “Everything went down, down, down and kept going down. Lenders went out of business. Now I’m on unemployment.”

Help, though, is on the way through a new program — the Emergency Homeowner Loan Program (EHLP) — that brings $105.8 million in federal funds to Pennsylvania to help homeowners facing foreclosure with emergency, no interest loans of up to $50,000. Under the terms of the program, the federal government will pay up to 70 percent of a troubled homeowner’s mortgage payments for two years if that homeowner is unemployed, sick or has seen their income drop by 15 percent or more.

Congress appropriated the money Oct. 1, but budget battles in Washington, D.C. pushed back the start of the new program from January to April.

The funds are available only until Sept. 30.

“They’re going to pay what’s in arrears,” Tyson said. “Plus, the attorney’s fees and then I’ll pay 30 percent, and they’ll pay the rest.”

Tyson is in the process of applying for an emergency loan — hopeful that he can keep his home.

He insists, though, that he won’t have to rely on the program for the allowable two years. “I’ll be employed before then,” he said. “Even if I have to start my own business.”

EHLP is based on a similar Pennsylvania program called Homeowners’ Emergency Mortgage Assistance Program, which was pioneered by Rep. Chaka Fattah. Fattah also helped to push EHLP through a reluctant Congress.

“I introduced this in 2002, 2004, 2006, 2008 and we passed it in 2010,” Fattah said. “I introduced the federal version based on the success we had in Pennsylvania.”

The program is just a few weeks old, and so far 74 Pennsylvanians have been approved for an emergency loan while 136 were denied.

Fattah and Sen. Bob Casey held a press event Monday at City Hall in an effort to raise awareness of the program and help Philadelphians remain in their homes. There were 2.9 million foreclosures in 2010 across the country. In Pennsylvania, there were an estimated 34,000, and in Philadelphia, 5,802 foreclosure notices were sent in 2010.

Fattah said this program should help about 5,000 families in Pennsylvania avoid foreclosure.

“If you’re out of work through no fault of your own, then you can get assistance,” he said. “We need to make sure we take advantage of this. There are plenty of people who can receive help.”

The Pennsylvania program has helped “tens of thousands of families,” Fattah said, adding that he hoped the federal program would yield similar results.

Fattah said the program would ultimately save taxpayers money. Each foreclosure costs the taxpayer about $100,000. On average, he said, emergency loans cost only about $10,000.

In addition, participants are required to pay back the loans.

“These are loans. They pay it back over time,” he said.

Philadelphia has been at the forefront in dealing with the foreclosure crisis.

In January, the sheriff’s office halted sheriff’s sales for 50 days. That followed a similar 30-day moratorium in December. Sales were allowed to resume in April and May but President Judge Pamela Dembe gave homeowners 90 days to secure EHLP assistance.

“It’s really been a marriage of all of us in city government,” said Judge Annette Rizzo. “And the fine leadership in Washington, giving funds to actually fuel a program that has a direct and personal outreach throughout the city.”

Tyson is waiting for a decision on his application, and hoped that others would take advantage of the program.

“There are millions of people unemployed through no fault of their own,” Tyson said. “There are jobs going overseas. Jobs are just closing down. The economy is bad for everybody.”