Pennsylvania to Resume Homeowners Assistance Program

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Program that had saved thousands of homes is resuming.

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recently passed Pennsylvania bill will dedicate approximately $63 million dollars to reinstate funding for a unique homeowner’s assistance program that had been defunded after spending cuts in 2011. The funding follows a $25 billion multi-state settlement with the nation’s five largest mortgage servicers after widespread investigations into abusive mortgage servicing practices.

The new law allocates over $10 million per annum to fund the Homeowner’s Emergency Mortgage Assistance Program (HEMAP) through the 2017 fiscal year. This amount approximates the level of HEMAP funding prior to its termination, and represents ninety percent of Pennsylvania’s share of the $25 billion dollar multi-state settlement.

The rate of foreclosures in Pennsylvania rose significantly in 2011. Amid pressure from consumer advocacy groups, the bill to re-fund HEMAP received strong bipartisan support, passing with a vote of 197-0 in the House and 47-0 in the Senate. The bill was signed into law by Governor Tom Corbett in late June.

Not all homeowner advocates are happy with the new law, however.  One of its provisions will change the consequences of failure by mortgage servicers to comply with the notice requirements of Pennsylvania’s Act 91, which are designed to inform consumers of their legal rights.  Previously, the failure to comply with the notice requirements of Act 91 deprived courts of the power to enter a judgment in mortgage foreclosure. The new law would appear to allow for servicers to obtain foreclosure judgments that are immune from attack even when they have failed to comply with notice requirements.

HEMAP had been administered by the Pennsylvania Housing Finance Agency (PHFA) since 1983 and had assisted as many as 47,000 homeowners to stave off foreclosure by providing timely loans to aid with temporary income shortfalls. The program has been seen as a potential model for other state and federal initiatives, as it has reduced the foreclosure rate for homeowners with a high prospect of resuming mortgage payments within two to three years.

PHFA has not given a timetable for resuming its acceptance of HEMAP applications. The agency recently stated that it will wait for the arrival of the allocated funds before it begins to do so, but that it is unaware of when those funds will be available.