Inquirer Editorial: Slow down foreclosures

The Obama administration's Department of Housing and Urban Development needs to act faster on an emergency loan program that would keep thousands of Pennsylvania families in their homes.

Congress authorized $1 billion last July to help unemployed homeowners nationwide who are at risk of foreclosure. The measure was championed by Rep. Chaka Fattah (D., Pa.).

In October, HUD announced that Pennsylvania would receive about $105 million. But the Pennsylvania Housing Finance Agency, which will administer the loans, is still waiting for the money from Washington.

The delay is "outrageous," said Mark Schwartz, a PHFA board member and executive director of Regional Housing Legal Services, which has an office in Glenside. Each month, about 13,000 homeowners in Pennsylvania receive foreclosure notices. (New Jersey isn't taking part in the program.)

There were more than one million bank repossessions last year, in spite of a freeze on foreclosures by some banks due to the "robo-signing" scandal. Foreclosures are expected to increase in the first quarter of this year.

The federal aid will be available to homeowners who are at least three months delinquent in their mortgage payments, who meet certain financial requirements, and who have lost income involuntarily. Loans will be up to $50,000.

Sen. Bob Casey (D., Pa.) wrote a letter Jan. 6 to HUD Secretary Shaun Donovan urging him to release the money. "Each day that HUD delays getting the funding to the state agencies is another day that unemployed homeowners must wait to obtain the relief," Casey said.

A HUD spokeswoman said the emergency loans should be available before the end of March. She said "implementation challenges" have resulted in HUD's moving slower than expected.

But there shouldn't be any challenges to implementing the program in Pennsylvania. PHFA has administered a very similar safety net for struggling homeowners since 1983.

The state's Homeowners' Emergency Mortgage Assistance Program has helped about 44,000 families stay in their homes since its inception. Under the plan, homeowners qualify for help if a pending foreclosure isn't their fault, and if they have reasonable prospects for getting back on their feet.

The legislature has provided money for HEMAP annually; the average emergency loan is about $10,000. The state has been paid back more than it spent over the years, and about 80 percent of the loan recipients end up keeping their homes.

In other words, the people running the program in Pennsylvania know what they're doing and could easily put the federal dollars to good use immediately. But still they wait.

Philadelphia's Court of Common Pleas imposed a 30-day moratorium on sheriff's sales just before Christmas. There was much support for the action in light of the anticipated federal money targeted for Pennsylvania.

HUD needs to act with more urgency to protect the homeowners for whom this aid is intended.