There is little debate that the foreclosure crisis and the subsequent collapse of the US housing market were among the most devastating negative consequences of the national economic downturn. An article this week on MSNBC.com predicted that even with a recovering economy the number of foreclosures will continue to worsen and experts cite it as the second-biggest drag on the economy after fluctuating oil prices.
Pennsylvania has been ahead of the curve in responding to home foreclosures. Since 1984 the PA Homeowners Emergency Mortgage Assistance Program has helped keep 44,000 families in their homes by providing bridge loans to people who had lost their jobs. As a result Pennsylvania has had a considerably smaller number of foreclosures in comparison to its unemployment rate. For instance, with a record number of applications in fiscal year 2010, PA had the 26th highest unemployment rate but was 37th in foreclosures.
HEMAP has been praised as far more effective and economical than the federal Home Affordable Modification Program. For a hypothetical mortgage of $210,000, HEMAP costs the Commonwealth an estimated $1,620; HAMP comes with a cost of about $13,600 for the feds.
Further evidence of HEMAPs success: 80% of loan recipients have retained ownership of their homes. And HEMAP loans do not accrue interest until the borrower has found employment.
So the question remains why when the housing market is just beginning to recover and the threat of foreclosure still looms, and when Pennsylvania has a successful, affordable and enviable program, would the governor's budget plan eliminate its funding?