Grassroots group calls for funding restoration for statewide foreclosure prevention program

BY JAMES HAGGERTY

A grass-roots group wants funding restored for a statewide foreclosure-prevention program that was gutted by the state budget.

Pennsylvania Save Our Homes Coalition, an association of housing and community agencies, religious and labor organizations, wants the Legislature to renew funding for the Pennsylvania Housing Finance Authority's Homeowners Emergency Mortgage Assistance Program. The state budget cut HEMAP funding to $2 million from $10.4 million, forcing the elimination of the program in July.

HEMAP, which dated to 1983, provided short-term loans to homeowners potentially facing foreclosure. Proponents of renewed funding say the state's surplus could cover the allotment, and they staged a rally in Philadelphia last week to generate support.

The state finished the last fiscal year with a surplus of $785 million, and only about $250 million of the total has been committed to other spending, said state Sen. John Blake, D-22, Archbald.

The effort to refund HEMAP gets a cool response from the state administration, though.

"We may revisit it in future budgets," said Eric Shirk, a spokesman for Gov. Tom Corbett. "We have to remain prudent."

The program, which distributed about 2,800 loans in the last fiscal year valued at about $29 million, provided a low-interest bridge financing to help troubled homeowners satisfy mortgage delinquencies and cover their home payments for up to two years. HEMAP provided loans to more than 45,000 homeowners over its 27-year existence.

"With the upcoming budget cuts on the state and federal level, there's going to be more unemployed people," said Mike Elick, president and CEO of Consumer Credit Counseling Service of Northeastern Pennsylvania, a Pittston-based agency that provides debt-management and budget counseling.

HEMAP received $244 million in state financing during its existence and collected $260 million in loan repayments, according to the coalition.

"More money has been repaid than appropriated," said Michael Hanley, executive director of United Neighborhood Centers of Northeastern Pennsylvania, which provides services to needy people.

UNC processed about 100 HEMAP funding applications annually.

"It really makes no sense that they cut this. It stabilizes neighborhoods and keeps families in their homes," Mr. Hanley said. "The recession was really driven by foreclosures. Until we get our neighborhoods and housing stabilized, we are not going to get out of the recession."

The state Housing Financing Authority, which provides low-interest residential development financing, obtained $105 million in federal funds in April for foreclosure-prevention loans.

The agency has committed about $32 million of the total, PHFA spokesman Scott Elliott said. PHFA will accept loan applications until Sept. 30.