A $1 billion federal program to prevent foreclosures turned out to be a frustrating disappointment. Only about half the money set aside for it was committed before the program expired in September.
Despite that poor showing nationally, there were great successes at the state level. In Pennsylvania, largely due to the efficiency of the Pennsylvania Housing Finance Agency and the network of housing counselors and lawyers it helped put in place, the state accounted for about 25 percent of the emergency assistance issued under the federal program. That should be an important lesson as the commonwealth tries to deal with its continuing housing crisis effectively.
The federal Emergency Homeowners' Loan Program, created in 2010, was modeled on Pennsylvania's successful Homeowners' Emergency Mortgage Assistance Program. HEMAP, which closed this year due to budget cuts, provided loans to homeowners facing hardships such as unemployment, helping them make mortgage payments for up to three years and lending up to $50,000 each. Over its 28 years, HEMAP helped prevent 45,000 home losses, and its loans were repaid at high rates.
Unfortunately, the federal program did not perform as well. As of Sept. 30, it had saved far fewer homes than predicted and become the target of recriminations from Congress, advocates, and homeowners. Experts observed that some of its problems could have been avoided if its parent agency, the U.S. Department of Housing and Urban Development, had followed the example of the Pennsylvania Housing Finance Agency.
Therein lies the lesson: Putting one effective agency in charge of housing funds can make a huge difference. In Pennsylvania, several agencies administer state and federal housing and community development programs, making coordination difficult. Consolidating the state Department of Community and Economic Development's housing programs under the PHFA, for example, would ensure that services are more effective and efficient.
Lack of coordination was identified as a problem years ago in a report the Reinvestment Fund prepared with the support of the William Penn Foundation. But its recommendations never gained much traction in Harrisburg.
While the DCED has its strengths, it has not always been able to compete effectively for federal funds, sometimes leaving millions of dollars "on the table." In contrast, the PHFA's strong track record and management have allowed it to bring more federal and private resources to the state.
Other states already have begun or completed realignments of housing programs under their housing finance agencies. Pennsylvania should follow suit through legislative and administrative actions. Making use of the Pennsylvania Housing Finance Agency's experience and expertise will help residents in need at a time when resources are stretched to the limit.