A program to extend relief to some homeowners facing foreclosure is getting new life thanks to a new source of funding.
Pennsylvania's Homeowners' Emergency Mortgage Assistance Program (HEMAP) was first established as a part of Act 91 of 1983. Under the program, short-term, low-interest loans were provided to homeowners who had fallen behind on mortgage payments through no fault of their own. PHFA lists some of examples of circumstances under which homeowners qualified for HEMAP including loss of employment due to layoff, strike or plant closing and serious medical problems.
The program was one of the casualties of the cuts imposed by Gov. Tom Corbett and the Republican controlled Pennsylvania General Assembly in the 2011-2012 state budget. Funding for the program was cut by approximately $8.5 million from the previous year's levels, or approximately 80 percent. As a result, the Pennsylvania Housing Finance Agency (PHFA), which oversees the program, had to shut the program down due to lack of funding.
Over it's 28 year history, the program served approximately 46,000 homeowners in the commonwealth before it's suspension in July 2011.
Under Act 91, homeowners in danger of foreclosure were sent an Act 91 notice, which included information on HEMAP and other possible action they could take to avoid foreclosure.
According to PHFA, 777 Act 91 notices were sent out in Warren County from the fourth quarter of 2008 until the third quarter of 2011 when the program ceased. A high of 99 notices were sent during the second quarter of 2009 and a low of 10 were recorder as the program drew to a close in the third quarter of 2011. A drop from 70 notices in the first quarter of 2011 to only 12 in the second quarter reflects program cuts.
A United States Department of Housing and Urban Development program modeled after HEMAP, the Emergency Homeowner Loan Program, also ended in 2011.
Foreclosure filings in the state increased approximately 55 percent in the first quarter of 2012 as compared to the same period of 2011.
As part of the Homeowners Assistance Settlement Agreement, in which 49 states received approximately $25 billion from the nations five largest mortgage lenders following litigation over deceptive lending practices, Pennsylvania received approximately $66 million.
In June, the Pennsylvania General Assembly signed Senate Bill 1433, which specified how the settlement money was to be used. The bill set aside 90 percent of settlement funds to be used to re-fund HEMAP over six years. A yearly allotment of $10,800 will fund the program between fiscal years 2013-2014 and 2016-2017. In fiscal year 2012-2013, the program will receive an additional $6,000, or a total $16,800, to re-establish the program and address backlog. In fiscal year 2017-2018 only $2,700 is set aside as settlement funds run out. On June 22, Gov. Corbett signed the measured.
"I'm glad it's back for homeowners' sakes here," Housing Counselor Cindy Atkins with the Warren-Forest Economic Opportunities Council (EOC) said. "There's not a whole lot of programs left at the federal level to keep people in their homes anymore either."
To apply for HEMAP assistance a homeowner must go through a HEMAP approved credit counseling agency. The EOC is the only approved agency located in Warren County.
Homeowners 60 days behind on their mortgage payments will receive an Act 91 notice at which point they may be eligible for HEMAP aid. According to Atkins, lenders typically begin pursuing foreclosure after a borrower is 61 days delinquent.
Homeowners then contact an approved counseling agency to make an appointment to apply for HEMAP. To apply for HEMAP a homeowner must meet with a counseling agency within 33 days of receipt of an Act 91 notice. Atkins said she goes over what information will be required for the application prior to the appointment. Information required on the application includes personal and property tax information, 90 days of bank statements and 30 days of pay stubs among other things.
"The application is pretty extensive," according to Atkins. "It's multiple pages."
Based on the application, HEMAP loan eligibility is determined by the PHFA.
"All HEMAP loans, continuing or noncontinuing, are limited to a maximum of 24/36 months from the date of the mortgage delinquency, or to a maximum of $60,000.00, whichever comes first," according to the PHFA. "HEMAP loan recipients are required to pay up to 40 percent of their net monthly income, as determined by HEMAP, towards their total housing expense. The minimum monthly payment/contribution to HEMAP, set by law, is $25.00 per month per mortgage assisted."
HEMAP aid is a loan and is repaid at an interest rate of nine percent.
Further information on the HEMAP program is available by visiting www.phfa.org/consumers/homeowners and clicking on the highlighted Homeowners' Emergency Mortgage Assistance Program link near the bottom of the page.
Warren County homeowners facing foreclosure who have received an Act 91 notice can contact Atkins at the Warren-Forest EOC at 814-726-2400, ext. 3302.