HARRISBURG - Pennsylvania's program to help homeowners avert foreclosure is reopening after a year's hiatus, thanks to a deposit last week of millions of dollars from a multi-state legal settlement.
Homeowners who have received foreclosure notices can apply again for loans and other assistance through the Homeowner's Emergency Mortgage Assistance Program, Sen. John Gordner, R-27, Berwick, announced Wednesday. He authored a new state law that outlines how some of the settlement money will be spent.
The Pennsylvania Housing Finance Authority has informed lenders that HEMAP applications can be accepted, Gordner said.
HEMAP, which began in 1983, has been shut down since July 2011. State budget cuts had made it impossible for program administrators to approve new loans to help homeowners avert foreclosure.
The prospect of reviving HEMAP became apparent earlier this year upon a $25 billion legal settlement with five major lending firms to settle allegations of abuse with mortgage servicing and home foreclosure practices. Pennsylvania is one of several states that joined the action against Ally, Bank of America, Citi, JPMorgan Chase and Wells Fargo.
Gordner's legislation establishes a trust fund using approximately $60 million of the settlement money to fund HEMAP for an extended period of years, as well as consumer protection programs.
This law targets 90 percent of the settlement to HEMAP, 5 percent to the state attorney general for housing consumer protection programs and 5 percent for legal assistance related to housing issues.
In addition, the law provides a $6 million appropriation to help PHFA officials deal with a backlog of applications.
Gordner said he's been waiting for the settlement money to be deposited so the law can go into effect. He said the program has been very effective since it started, enabling 85 percent of homeowners who have participated to remain in their homes.
With the program out of existence for a year, there will likely be a demand from homeowners seeking assistance, said Elizabeth G. Hersh, executive director of the Housing Alliance of Pennsylvania, an advocacy group.