HEMAP foreclosure assistance ends due to budget cuts

The PA Housing Finance Agency’s (PHFA) Homeowners Emergency Mortgage Assistance Program (HEMAP) is no longer accepting applications following its dramatic budget cut in the state’s new budget. This year HEMAP was allocated $2 million, reduced from last year’s $10 million. PHFA published a notice in the PA Bulletin stating it would have insufficient funds for this program after July 1, 2011.

Distressed homeowners may still be able to apply to PHFA for the Emergency Homeowners Loan Program (EHLP), which received federal funding. EHLP is a bridge loan program designed to help families affected by unemployment, under-employment or medical bills to pay their mortgages. The $50,000 bridge loan (a zero percent interest, non-recourse, subordinate loan) was created to assist borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes and hazard insurance for up to 24 months. The deadline for the EHLP program is September 30, 2011.

“PHFA recently announced a partnership with United Way of Allegheny County to promote the Emergency Homeowners Loan Program within Allegheny County and the 10 surrounding counties,” said Ronald Croushore, PAR District 8 vice president and PHFA board member. The United Way has established a 2-1-1 hotline in Western Pennsylvania for distressed homeowners to call to get more information. If 2-1-1 isn’t yet in your area, call 1-800-552-4171.

While HEMAP, a state program, was in place, lenders were required by law to give Pennsylvania homeowners time to apply for assistance. After sending the Act 91 notice, the lender had to wait 33 days to see if the homeowner had applied to HEMAP. If the homeowner had applied, the lender was required to wait to see if the application was approved, giving an extra 93 days before the court action in foreclosure is started. Now that HEMAP is shut down, the lender will not have to wait to file in court, according to the Housing Alliance of Pennsylvania.

“Without HEMAP in place, I think it’s going to create more problems and heartaches,” said Elizabeth Hersh, executive director of the Housing Alliance of Pennsylvania. “We don’t want to see any more homeowners lose their homes or more distressed homes on the market. We’re concerned that without HEMAP, Pennsylvania will see more foreclosures.”

HEMAP has been an extremely successful program helping 47,000 homeowners since 1983, according to Hersh. It had an 85 percent success rate with more money being paid back to the program than has been lent out.