Homeowners Emergency Assistance Program HEMAP

1. Homeowners Emergency Assistance ProgramHEMAP Lawrence Swanson Executive Director ACTION-Housing, Inc. Mark Schwartz Executive Director Regional Housing Legal Services

2. The Beginning • The Homeowners Emergency Mortgage Assistance Program began as a pilot in 1982 in Western Pennsylvania. • Unemployed advocates, non profits, local government officials, and members of the banking community came together to address the large numbers of people who where losing their homes to foreclosure, or at risk of foreclosure.

3. HEMAP • The initiative was targeted at unemployed households with a record of prior good credit. • Focus was on those households whom could resume repayment of their mortgages within 12-36 months upon re-employment. • Underwriting also looked at equity and probability of repayment upon re-employment.

4. HEMAP Statewide • Pennsylvania instituted HEMAP statewide in 1983 through ACT 91. • The Program provides up to 36 months of assistance for an agreed upon time frame in order for the client to resume mortgage payments. • HEMAP provides up front payments to cure arrearages and slow - deferred payment of that amount. • ACT 91 also involves notification to all mortgagors of their right to apply for assistance. • Borrowers have 30 days to apply at one of 40 approved counseling agencies.

5. Non Profit Counseling Agencies • Non Profit counseling agencies assist the applicant in producing the following: • Budget going forward • All debt related information and non secured debt • Modification information provided by services/with servicer • Statement of circumstances • Overall plan to regain employment or resolve financial issues • Once borrowers apply, the foreclosure can not proceed until a decision on the application is made. • Borrowers approved for ongoing assistance are recertified annually.

6. Program Impact Over Time • A network of 43 non profit counseling agencies across the state with support staff training and development. • Received bi-partisan support from Sate Legislature and total appropriations of $233,500,000 over time. • Created a revolving fund from repayments that made a total of $450,475,000 in loans. • Processed 183,040 applications for the program. • Approved 43,247 loans. • Provided alternative counseling and/or moratorium to allow other transfers. • Customer repaid loans involve 20,194 loans. • Projected recovery rate for loans is in the 75-80% range and varies over time and economic conditions.

7. Underwriting • Use of “no fault” criterion that borrower had good payment record prior to loss of employment, heath care crisis, or similar event. • Underwriting looks at the ability to resume payments on original or adjusted loan at completion of assistance period. • Underwriting assumes re-employment based upon borrower prior experience.

8. Implications • It is possible to make targeted loans that assist some borrowers who have loss of income but have longer term ability to repay. • HEMAP is one program responding to sudden loss of income circumstances and is focused on that issue. • HEMAP approval rates have been limited by availability of funds and full funding would likely result in 40% of applications being approved. • Counseling is an essential ingredient and our PA experience is that it should be mandatory. • Counseling that provides loan modification and servicer related assistance can leverage additional resources and create long term viable plans.

9. The End Questions?