By Kenneth Bigos
Times guest columnist
Since the beginning of the pandemic, the policymakers regulating the collection of mortgage payments have been the Federal Housing Finance Administration, which regulates Fannie Mae and Freddie Mac loans, the Veterans Administration for VA loans, and the Federal Housing Administration for FHA-insured people Loans or the Department of Agriculture with USDA loans have moratoriums on all mortgage foreclosures on their loans. Homeowners were able to apply for up to 12 months mortgage injunction to prevent payment collection and negative activity on the borrower’s credit profile. Even various national lenders allowed mortgage waivers on their portfolio mortgage loans for struggling homeowners.
In a few weeks it will be the anniversary of the former President Trump declaring the COVID-19 pandemic a national emergency. Around the same time, the first borrowers will have to repay the missed mortgage payments that, due to their forbearance, did not require recovery. Unfortunately, for many Pennsylvanians, economic conditions have not improved to return to making payments. Conventional mortgages that are not secured by the government do not have any special requirements to modify the borrower’s defaulted mortgage.
This is where the Emergency Mortgage Assistance Program (HEMAP) for Homeowners, administered by the Pennsylvania Housing Finance Agency (PHFA), can serve as the lifeline for many homeowners in Pennsylvania. Adopted in 1983 due to the closure of many steel mills in western Pennsylvania, HEMAP provides emergency loan assistance to households who have defaulted on their mortgage due to circumstances beyond their control and are willing and / or able to resume regular mortgage payments .
When a homeowner is approved for the HEMAP program, PHFA will restore the borrower’s mortgage for up to 36 months of missed payments. If the regular payments can be resumed, PHFA will require the borrower to begin paying their mortgage and HEMAP loan. The monthly payments for HEMAP are only $ 25 per month based on the ratio of housing costs to income.
Since HEMAP was founded, this program has helped over 50,000 families in Pennsylvania avoid foreclosure. For all payments made to these families, PHFA has reclaimed $ 328 million through loan repayment. This is a great program that doesn’t put a significant burden on Pennsylvania taxpayers.
During this time of economic peril, we can all expect a tsunami of foreclosures that will devastate communities large and small in Pennsylvania. Because of this, HEMAP needs to be prepared for the challenge. Unfortunately it isn’t. The HEMAP program currently has around $ 10 million available to help households find mortgage relief. That could be enough to support 1,000 applicants while there are over 1 million Pennsylvanians who are late on their mortgages. This is a gross imbalance that will force PHFA-worthy applicants as the agency does not have sufficient funds.
Additional funding from the Pennsylvania budget is required to ensure this program is fair and effective. PHFA requested the Governor’s Office to allocate US $ 50 million to the HEMAP program. These funds are used immediately to prevent many mortgage foreclosures.
It was only a decade ago that we saw the collapse of the financial system and the great recession that resulted in thousands of foreclosures. States and communities that have been proactive have been able to stem the tide of foreclosures and recover quickly. A similar call to our state government to provide adequate additional funding for HEMAP is needed. I urge you to speak to your State Representative and Senator to express your similar concern. You can find your representatives through the website: https://www.legis.state.pa.us/cfdocs/legis/home/findyourlegislator.
Kenneth Bigos, Executive Director, Affordable Housing Centers of Pennsylvania, 846 N. Broad Street, Philadelphia, PA 19130, 215-765-1221, [email protected].