Casey Calls on HUD to Fund PA Foreclosure Prevention

WASHINGTON, DC— U.S. Senator Bob Casey (D-PA) today sent a letter to Secretary of Housing and Urban Development (HUD) Shaun Donovan urging funding for Pennsylvania emergency mortgage relief and foreclosure prevention in the upcoming third round of Neighborhood Stabilization Program funding announcements.

“In Pennsylvania, the Homeowners Emergency Mortgage Assistance Program (HEMAP) has been providing unemployed homeowners with temporary mortgage relief since 1983,” wrote Senator Casey.  “I urge you to consider HEMAP and similar programs in other states for funding under the third round of NSP.  Pennsylvanians who have lost their jobs desperately need assistance and PHFA stands ready to help them, but needs additional resources to address the scope of the unemployment and foreclosure crises.”  

In past funding rounds, money went to five states deemed to be the “hardest hit.” However, Pennsylvania has also experienced an unacceptable number of foreclosure filings.  Pennsylvania has a successful and efficient program in place that could provide immediate assistance to keep people in their homes and protect property values.  New criteria announced by HUD in April are consistent with expanding allowable uses of Neighborhood Stabilization Program funds for foreclosure mitigation and prevention programs like the one in Pennsylvania.

According to RealtyTrac, foreclosures in Pennsylvania increased by 20% from 2008 to 2009 and nationally by 21% to a record 2.8 million foreclosure filings in 2009.  In March, over 350,000 properties nationwide got foreclosure filings, their highest monthly total since RealtyTrac started reporting numbers in 2005.

The full text of Senator Casey’s letter to Secretary Donovan is attached.


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May 21, 2010

Dear Secretary Donovan:

I am writing in response to the recent announcement from the Department of Housing and Urban Development (HUD) that the Obama Administration plans to work with Congress to obtain additional funding for the Neighborhood Stabilization Program (NSP) and foreclosure prevention counseling.  I am pleased to hear of the Administration’s ongoing focus on the housing market crisis, and I am grateful for your personal efforts on behalf of borrowers in danger of losing their homes.

I have supported the NSP since it was created in the Housing and Economic Recovery Act in 2008.  I am concerned, however, by your statement today that the third round of NSP funding will be targeted to the hardest hit areas.  While some states have certainly been affected more severely than others according to certain indicators, the foreclosure crisis has touched all 50 states.  Working with local governments and housing professionals, many states have implemented innovative and effective programs to help homeowners.  I appreciate the Administration’s goal of maximizing the impact of limited federal funds, but where existing programs can show a strong track record in preventing foreclosures and earning returns on state investment, their success should be considered a factor in awarding federal funds.

In Pennsylvania, the Homeowners Emergency Mortgage Assistance Program (HEMAP) has been providing unemployed homeowners with temporary mortgage relief since 1983.  Administered by the Pennsylvania Housing Finance Agency (PHFA), the Commonwealth has appropriated about $233 million and combined it with other funding streams for a total of about $249 million.  To date, homeowners have repaid $254 million, which has allowed PHFA to efficiently recycle the repaid funds to help more families stay in their homes throughout a temporary income loss due to unemployment or a health crisis.  Before borrowers receive HEMAP loans, PHFA determines that they will be able to resume making their monthly payments within a certain period of time.  For that reason, PHFA estimates that less than 20% of families who receive HEMAP assistance lose their involuntarily, which is a substantially better track record than any of our federal efforts to date.

I urge you to consider HEMAP and similar programs in other states for funding under the third round of NSP.  I understand that HUD has made a number of changes that affect the definitions of certain terms that has made the program substantially easier for grantees to use.  I appreciate the Department’s responsiveness to the concerns of those that are operating the program on the ground.  PHFA has informed me that in the past, HEMAP has not qualified for NSP funding because it offered foreclosure mitigation and prevention.  Yet the newly expanded definitions of “foreclosed” and “abandoned” announced on April 2, 2010 appear to expand the permissible uses of NSP funds to include foreclosure mitigation and prevention programs.  Whether or not you believe that clarification is necessary, HEMAP has a strong track record of recouping expended funds and would be a responsible use of federal funds for foreclosure mitigation and prevention purposes.  Also, since the program has been in existence for over 25 years, PHFA would be able to spend grant funding immediately to help fight foreclosures in Pennsylvania.

Consistently with that request, I ask that you not limit HUD’s aid in fighting the foreclosure crisis to a small number of states that are determined to be the “hardest hit.”  According to RealtyTrac Inc., more than 5,500 homes in Pennsylvania received at least one foreclosure filing in April, one of the highest monthly totals since the firm began collecting data in 2005.  More than 1,400 of those properties were seized.  Communities and neighborhoods across Pennsylvania have been devastated in the foreclosure crisis.  Pennsylvanians who have lost their jobs desperately need assistance and PHFA stands ready to help them, but needs additional resources to address the scope of the unemployment and foreclosure crises.

I would appreciate the opportunity to speak with you about this further.  

Thank you for your consideration.

Sincerely,

Robert P. Casey, Jr.
United States Senator