Activists push to restore homeowner lifeline

By John L. Micek

HARRISBURG — Social activists say they're working to revive a three-decade-old state program that provided emergency mortgage assistance to struggling homeowners.

Pennsylvania's Homeowners Emergency Mortgage Assistance Program was shut down at the end of June after lawmakers appropriated just $2 million for it in the 2011-2012 state budget.

In a June 30 memo, the Pennsylvania Housing Finance Agency, which administers HEMAP, said the funds were insufficient to keep the program going and pulled the plug.

A group of about 30 housing, labor, church and community organizations, gathered under the umbrella of the Pennsylvania Save Our Homes Coalition, has launched a website and petition campaign to try to resurrect the project, which was funded at $10.4 million in the 2010-11 fiscal year.

"While there were cuts all over the place in the budget, this one was targeted for elimination," said John Dodds, executive director of the Pennsylvania Unemployment Project in Philadelphia, one of the groups participating in the coalition. With the housing market and the economy still volatile, "this is exactly the wrong time to end it."

Alan Jennings, director of the Community Action Committee of the Lehigh Valley, said he hopes an improved economy and more robust tax collections might mean that lawmakers will employ a "supplemental appropriation" to restore some funding to HEMAP and other state programs that fell under the budgetary knife.

"The timing is just extraordinary," said Jennings, who met Thursday with Sen. Pat Browne, R-Lehigh, to discuss reviving the program. "There are 170,000 foreclosures expected in Pennsylvania by the end of 2012, and we're bailing out on a program that has been in place for 30 years."

Browne acknowledged the value of the HEMAP program, but said the state would have to be sure it had the ongoing revenue to continue funding it. He also said lawmakers would likely consider HEMAP with a bloc of other funding restorations if the money is there for it.

"Whether the revenue capacity is there to allow the program to hold up is one of the things" that would have to be considered, Browne said.

Cindy Daley, policy director for the Housing Alliance of Pennsylvania, said it "doesn't make sense for the state to eliminate this program in the middle of a recession caused by the meltdown of the mortgage market."

"HEMAP is a model of how to avoid foreclosure, and that's why it should be funded," said Daley, who said her conversations on trying to jump-start the program are still in their most preliminary stages.

The $27.3 billion budget plan that Gov. Tom Corbett presented to lawmakers in May eliminated state support for the mortgage program, which traces its roots to the administration of former GOP Gov. Dick Thornburgh.

A House-approved budget in May put back $7.8 million for the program, a move that was believed to have the support of the Senate. But funding was cut in the $27.15 billion spending plan Corbett signed into law in late June.

Legislative Democrats had been holding out hope that majority Republicans would have used part of a year-end budget surplus of about $785 million to restore funding to HEMAP along with other programs set for the knife.

"It's all well and good to say that we'll cut this and we'll cut that, but there are people behind those numbers," said Rep. Jennifer Mann, D-Lehigh. "This was a tough budget and people are going to start to see what was left on the table."

Pennsylvania Housing Finance Agency spokesman Scott Elliott said the agency is now steering homeowners into a federally funded mortgage assistance program that runs through the end of September. The agency has $105 million to disburse through the federal program and had committed $33 million of that tally as of last week, he said.

"We think, with August and September still ahead, we have a good chance of committing the rest of that money," Elliott said.

The end of the program also means that lenders will soon no longer have to send out formerly required letters letting struggling homeowners know that there was state aid available to them. The "Act 91 letters" required lenders to wait as long as 93 days before they began foreclosure proceedings.

In the first three months of this year, lenders sent out 34,609 such notices. That's an increase from the 31,411 notices sent out during the fourth quarter of 2010, but still down from the 44,758 notices sent out during the middle three months of 2010, state records indicate.

Bob Rupel, president and CEO of Bethlehem-based Team Capital Bank, said the state's banking industry — through its official trade group, the Pennsylvania Bankers Association — believes the HEMAP program made sense for bankers as well.

That's because it's better business for bankers to keep people in their homes than to kick them out. Foreclosed properties are an expensive headache for banks to maintain.

"We have always been a proponent" of the HEMAP program, said Rupel, a former chairman and board member of the bankers association. "They did good work. And we always advocated for them to get more money to do more of the good things they did."