Federal mortgage relief program to bring $106 million to Pa. homeowners

Pennsylvania will receive nearly $106 million for homeowners facing foreclosure under a recovery program authored by U.S. Rep. Chaka Fattah, the U.S. Department of Housing and Urban Development announced Tuesday.

The new Emergency Homeowners Loan Program is part of the Wall Street overhaul and consumer protection legislation signed into law by President Obama in August.

Congress allocated $1 billion nationally for the program, which Fattah modeled on Pennsylvania's own Homeowners' Emergency Mortgage Assistance Program (HEMAP). HEMAP has dealt out $244 million in loans to 41,000 unemployed homeowners since Fattah created the state program in his first year in the state House of Representatives in 1983.

The new federal program provides up to $50,000 for homeowners whose income is cut by more than 15 percent because of job loss or reduced work. It will target homeowners who are at least three months behind on their mortgage payments, and the money can be used for up to two years to pay for mortgage principal, interest, mortgage insurance, taxes, and hazard insurance.

While the money is considered a loan, homeowners who remain in their homes at least five years after the time of the loan can have 20 percent of the loan forgiven over the next five years - potentially the entire loan if the homeowner stays for 10 years.

The program will help at least 10,000 homeowners statewide, officials said.

Deputy Secretary Ron Sims came to the offices of the nonprofit Mount Airy USA to praise Fattah.

"This congressman has led the effort," Sims said. "This would not be on the table without him."

Mount Airy USA is one of the many community organizations that will provide housing counseling for this and other programs.

The Pennsylvania Housing Finance Agency will administer the federal program, as it has the state HEMAP program. Fattah noted that the HEMAP program has recovered all the principal it has loaned out plus $13 million in interest.

While the state program requires that homeowners have actually received a foreclosure notice, the new federal initiative looks to reach people before that point. For more information, call HUD at 800-822-1174 or www.phfa.org.

HUD expects to begin taking applications by the end of the year.