30 Ways in 30 Days: Emergency Mortgage Assistance

Budget Cuts Would Reduce State Mortgage Assistance

Emergency mortgage assistance to help cash-strapped families avert mortgage foreclosures and save their homes could be curtailed at a time when demand is highest for the pioneering Pennsylvania program.  A state budget approved in the state Senate would cut funds by 10% below that requested by the Governor and by 38% compared to funds available to borrowers this year.

HARRISBURG (June 8, 2009) - Hundreds of Pennsylvania workers squeezed out of their jobs by the economic recession may also be squeezed out of their homes, due to proposed cuts in the state's pioneering Homeowner's Emergency Mortgage Assistance Program (HEMAP).

HEMAP, considered by many as a national model, is a loan program created after the collapse of the steel industry to help keep families in their homes when faced with short-term emergencies such as unemployment, underemployment or a family health crisis. It offers supplemental loans to homeowners of all income levels while they get back on their feet.

Ed Boito, coordinator of the Pennsylvania Works! campaign for PennFuture, said cutting the program could ultimately result in higher costs to everyone.

"Sometimes you have to spend money to save money," Boito wrote in a recent op-ed.  "Spending money to save a family from foreclosure saves money, too."

He noted that HEMAP provides about $11,000 in homeowner assistance on average.  HEMAP requires participants to submit to an approval process, in which they must show they have the ability to repay the mortgage and the loan, plus interest.  If approved, the state holds the mortgage until the loan is fully repaid.

In 2008, Pennsylvania had nearly 43,000 foreclosure filings, a 127% increase compared with 2007 figures.  This year, the number of filings so far puts the state on track to match or surpass 2008.

In April, Governor Rendell approved an additional $5 million in emergency funding for the program, bringing the total up to $16 million in the current fiscal year.  The emergency infusion provided assistance for about 500 additional families.

"Eleven thousand dollars per recipient is small potatoes compared with the cost of providing other social services these families would need if they were forced from their homes," Boito wrote, noting that such costs can total tens of thousands of dollars.  "And let's not discount the emotional trauma.  The stresses on these displaced homeowners often lead to depression, drug or alcohol abuse, theft, domestic violence or child abuse."

In addition, vacant and unsold homes drive down property values.  Helping families remain in their homes, and receiving repayment of the loan, plus interest, is a better alternative for everyone, Boito observed.

The Governor's proposed budget called for going back to the $11 million allocation before the addition of supplemental funding.  The Senate plan trimmed that by another $1.1 million.

"If $16 million is needed now to keep the program operational, common sense says that more funds are necessary, as demand for HEMAP will only increase until the economy rebounds," Boito wrote.

Contact Ed Boito, coordinator of the Pennsylvania Works! campaign for PennFuture, at 717-214-7928 or by email at boito@pennfuture.org.

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