The Homeowner Emergency Mortgage Assistance Program is one step closer to resurrection.
The State House recently returned Senate Bill 1433, which would restore HEMAP funding, as well as provide other provisions for homeowner relief. The House of Representatives earlier this week voted unanimously to approve the legislation, which now awaits final approval by the Senate.
The bill, introduced by Senator John R. Gordner, R-Columbia, and co-sponsored by more than two dozen fellow state legislators, would divvy up the estimated $266 million Pennsylvania is to receive through settlement of the multi-state lawsuit against the nation’s five largest mortgage lenders.
The five companies — Ally Financial, Bank of America, Citigroup, JPMorganChase and Wells Fargo — were ordered to pay the $25 billion settlement due to its predatory lending tactics and the so-called “robo-lending” method of guaranteeing initial mortgages.
“The Attorneys General of 49 states, including Pennsylvania, have reached a $25 billion settlement with the country’s five largest lenders to end mortgage servicing and foreclosure abuses that stemmed from the recent lending scandal,” Gordner said via a statement released by his office. “Pennsylvania will receive approximately $60 million to be used for consumer and mortgage foreclosure protection programs.
“HEMAP has proven to be highly effective,” said Gordner. “Nearly 85 percent of homeowners who took part in the program remain in their homes. That’s good for our communities, and a necessary part of an economic recovery.”
This will be good news for organizations such as the Philadelphia Unemployment Project, The Pennsylvania Saving Our Homes Coalition and the Housing Alliance of Pennsylvania, which has long fought for HEMAP’s funding — and ultimately, its survival. The organization has staged several rallies and marches in support of HEMAP, going so far as to sit in on several House and Senate housing committee sessions.
“We appreciate the legislature earmarking these funds to aid homeowners,” said Philadelphia Unemployment Project Executive Director John Dodds. “A number of states used the settlement money to balance their budgets, and that is not what these funds are for.
“There is widespread support for HEMAP, but we couldn’t get funds into the governor’s budget. The National Settlement funds allow the state to resume the program using outside dollars.”
Alan Jennings, Executive Director of the Community Action Committee of Lehigh Valley called it, “the most sensible thing Pennsylvania could do to rescue homeowners, and what the Commonwealth was doing for 30 years.”
“It’s great that our legislature came around to doing just that,” Jennings said. “[By] restarting the Homeowners Emergency Mortgage Assistance Program.”
Senate Bill 1433 would not only fund the program, which hasn’t provided assistance to new clients since September 2011 because of state budgetary issues, but also Attorney General consumer protection services and legal assistance related to housing issues. Ninety percent of the fund’s money is set aside for the Pennsylvania Housing Finance Agency (PHFA) to operate HEMAP, with the remaining ten percent split evenly between the other two purposes.
“The legislation stipulates no more than $12 million will be distributed from the fund on a yearly basis for the targeted services,” read HEMAP’s explanatory statement, in part. “An additional $6 million will be appropriated immediately for HEMAP to address a backlog of new clients.”
HEMAP came into existence in 1983, to provide homeowner assistance to residents in western Pennsylvania who lost their jobs when the mining industry collapsed there. It has since expanded its services to every Pennsylvania homeowner. The fund has helped more than 46,000 Pennsylvania families stay in their homes since its inception.
Housing Alliance of Pennsylvania Executive Director Liz Hersh commended Gordner for taking up the cause, and voiced optimism that the legislation will muster enough votes for passage.
“We’ve [got the funding], so it’s absolutely great news. We had to go a year without HEMAP, which is unfortunate, but I think the legislature and the governor all heard what everyone was saying, that we need these programs to save people’s homes,” Hersh said. “Senator Gordner has really understood the importance of this, and he took the lead and initiative; we really appreciate his leadership.”
Hersh confirmed that $6 million will be made available immediately for truly distressed homeowners, but underwater homeowners can apply for assistance in the very near future.
“I think the Pennsylvania Housing Finance Agency is hoping for an August 1 date to reopen the program, but I believe once the vote comes, it will begin taking applications through housing counseling agencies, so when the program does reopen, they will have a pipeline,” Hersh said. “That $6 million portion is to be used right away for the cases out there, so [PHFA] is hoping to get the pipeline filled. They have to put notices out and take the normal steps, but they really hope to hit the ground running.”