For Immediate Release
5/8/08

Contact:

Greg Mahon (Office of Sen. Pippy)
(717) 787-5839
David Broderic (Office of Sen. Rhoades)
(717) 787-2637

Senators Unveil Foreclosure Relief and
Affordable Housing Initiative

Plan boosts emergency mortgage assistance, provides grants and loans,
creates housing trust fund.

HARRISBURG – Legislation that would increase emergency mortgage assistance, provide grants and loans to homeowners facing foreclosure, and create a housing trust fund was announced by two Republican senators today. 

Senator James Rhoades (R-29) and Senator John Pippy (R-37) unveiled the Foreclosure Relief and Affordable Housing Initiative, which could be considered by the Senate's Urban Affairs and Housing Committee as soon as next week. 

There were nearly 6,000 foreclosure filings in Pennsylvania in the first quarter of 2008, up 7.6 percent from the previous quarter. This package represents a $32 million effort to provide immediate assistance to families in danger of losing their homes, and to implement long-term initiatives to mitigate future downturns and expand the availability of affordable housing. 

"Although Pennsylvania is doing better than some other states in terms of foreclosures," said Sen. Rhoades, "we should take steps to help families get out of bad, adjustable-rate mortgage products and into fixed-rate mortgages that they can afford." 

"Generally speaking, we have done a good job in Pennsylvania of addressing housing needs," said Sen. Pippy, chairman of the Urban Affairs and Housing Committee. "But many worthwhile projects go unfunded each year because of the limited resources available to the Pennsylvania Housing Finance Agency. Creating a Housing Trust Fund will give them additional tools to help meet our needs." 

The Foreclosure Relief and Affordable Housing Initiative includes four components: 

• Refinancing Assistance Grants – This program would assist low-income homeowners who have mortgage terms that have become or are in the process of becoming unaffordable due at least in part to the current or readjusting interest rate. Qualified applicants would be eligible for a one-time grant of up to $2,500 to cover closing costs associated with refinancing. This program will not cover any mortgage payments; existing loan programs are available for that purpose. $10 million will be appropriated to PHFA for this program.
• PA Housing Affordability and Rehabilitation Enhancement Act (PHARE) – The Pennsylvania Housing Finance Agency (PHFA) has done a tremendous job in addressing housing and community development needs throughout the Commonwealth, yet nearly two-thirds of worthy projects presented to PHFA go unfunded due to a lack of resources. PHARE would allow PHFA to develop or expand affordable housing programs to build, rehabilitate and preserve homes for low to moderate income individuals and families, the elderly and people with disabilities. $10 million will be appropriated to create the PHFA Housing Trust Fund.
• Expanding Homeowner Equity Recovery and Refinancing Loan Programs – This program will boost the number of loans available through two successful PHFA programs, the Homeowner Equity Recovery Opportunity Loan Program (HERO) and the Refinance to an Affordable Loan Program (REAL). HERO loans assist homeowners who have sub-prime or predatory loans, and in some instances owe more than the current value of their homes. REAL is targeted at homeowners who are 60 days or less delinquent on mortgage loans that have adjusted to an unaffordable rate or will be adjusting in the future. $10 million will be provided to PHFA which, through the use of bond financing, will increase the amount of available loans by $50 million to $75 million.
• Homeowners Emergency Mortgage Assistance Program (HEMAP) – Senators Rhoades and Pippy also are seeking a $2 million increase in funding for HEMAP in FY 2008-09 (from $11 million to $13 million). HEMAP provides loans to protect Pennsylvanians who are financially unable to make their mortgage payments and are in danger of losing their homes to foreclosure. 

In Pennsylvania, 5,901 foreclosures were filed in the first quarter of 2008, according to RealtyTrac, which publishes a database of foreclosure and bank-owned properties. 

Nationally, first-quarter foreclosure filings – default notices, auction sale notices and bank repossessions – showed a 23 percent increase from the previous quarter and a 112 percent increase from the first quarter of 2007. The RealtyTrac report also shows that one in every 194 households in the United States received a foreclosure filing during the quarter. 

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