Homeowners facing foreclosure have one less friend in Pennsylvania and new research from The Reinvestment Fund (TRF) says the change is already proving costly for homeowners and the state.
The Research Brief: What if Pennsylvania Had Not Had HEMAP (Homeowners’ Emergency Mortgage Assistance Program)?reports that from 2008 to 2010, HEMAP saved more than 6,100 Pennsylvania homeowners from foreclosure. “Were it not for HEMAP, Pennsylvania’s foreclosure rate and rank among states would have been less advantageous” said Ira Goldstein, TRF Director, Policy Solutions. “Over this period, the number of homes saved from foreclosure by HEMAP amounted to between 4.6% and 5.1% of the total inventory of homes in foreclosure.”
TRF also reports that the total three-year financial impact of these saved homes to lenders, homeowners, neighbors, and local governments was approximately $480 million. The state appropriated $38 million for the program over that same period, representing a remarkable return on investment. Every county in Pennsylvania was positively impacted by HEMAP, with the typical county experiencing a $3.7 million combined financial impact. “This is a classic example of counter-productive thinking by policy makers. They decide to stop investing in a program that helps homeowners get past a rough spot and stay in their homes, and the result is the loss of hundreds of millions of dollars to the state’s economy,” said Liz Hersh, executive director of the Housing Alliance of Pennsylvania.
Zoe Holmes, 48, bought her two-bedroom row house in the Somerdale section of Philadelphia in 1998 and as a clinical supervisor at a drug and alcohol treatment facility, she was making her mortgage payments and living the homeownership dream. But then she had a heart attack and fell behind on her mortgage payment. The HEMAP program helped her catch up on her payments and allowed her to stay in her home. She later had a second heart attack and HEMAP was there to help her again. “I had to take in a roommate to meet the requirements of the program after the second heart attack, but I still own my home, a place where my family can visit, and I am very grateful for that,” she says. “Saving my home was good for me but it was also a benefit for my neighborhood where we all keep up our homes very well.”
Another Pennsylvania homeowner who may not be as lucky is 54 year old Tom Edwards. A career bus and truck driver, Edwards suffered a stroke and needed mortgage help but after first being told he was approved he was then informed the HEMAP program had run out of money. Unless, HEMAP funds are restored, he may lose his small house in the Wynnefield section of Philadelphia. “I don’t want to move. I like owning my home. Without the use of my left arm and leg I can no longer work and just need the help HEMAP can give to help me pay off my small mortgage loan.”
HEMAP was started in 1983 by an Act of the Pennsylvania legislature to provide temporary assistance to homeowners facing the loss of their home due to circumstances beyond their control and who had a likelihood of being able to resume their payments in the future. In the 28 years the program remained available, HEMAP helped over 46,000 families, touching every county in the Commonwealth. Over the years, HEMAP has been praised by Harvard University’s Kennedy School of Government, the Federal Reserve Bank of New York and Moody’s Financial Services as an effective foreclosure prevention measure.
But now, when more homeowners than at any time since the Great Depression are facing foreclosure, HEMAP has closed its doors to new applicants due to lack of funding in the 2011-12 budget. The program has been closed since July 2011. (It is again left unfunded in Governor Corbett’s 2012-13 budget.) Without HEMAP, more families will lose their homes and there will be more vacant homes in the housing market, further decreasing property values, increasing blight, and compounding the costs to families, lenders, local governments, and neighbors, which are estimated to be $77,000 per loan.
TRF’s reputation for finding evidence-based solutions to public policy problems has made it a leading national provider of such services. Governments at all levels and private investors often turn to TRF for practical and actionable frameworks to guide their investment strategies. TRF’s analytic rigor and commitment to finding measurable, lasting solutions is evident in its work — from its real estate market analyses to customized program assessments. For more see www.TRFund.com.
To view a summary of the report: www.trfund.com/resource/downloads/policypubs/HEMAPsummary.pdf