Fontana Discusses State of Housing Industry

The housing industry is one of particular importance and interest to me because I am a real estate sales associate and broker by trade. Although I have put this profession to the side while I serve my constituents in the state Senate, I participate in continuing education for real estate licensing and bi-yearly education requirements to retain my broker’s license.

When the housing market crashed a few years ago, I was appalled to learn that mortgage lenders were engaging in deceptive lending practices on a massive scale. Fortunately, the country is working to remedy the lending crisis, which has had a pervasive impact on Americans.

Earlier this month, the attorneys general of 49 states and the federal government reached a $25 billion agreement with five of the nation’s biggest lenders—Ally Financial, JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America—to end mortgage-servicing and home-foreclosure abuses stemming from robo-signing practices. Robo-signing refers to people signing documents and swearing to their accuracy without verifying any of the information.

Pennsylvania’s share of the settlement totals $266 million, which will be divided up and given to eligible citizens in our state for such things as loan modifications, refinancing of mortgages and direct relief through cash payments. The remaining money, $69 million, is allocated for direct payments to Pennsylvania for local foreclosure initiatives.

Being Minority Chair of the Senate Community and Economic Development Committee, I reached out to my fellow Democratic Senators and asked them to join me in sending a letter to Pennsylvania Attorney General Linda Kelly asking her to earmark the $69 million to fund a state program to prevent foreclosures.

The Homeowners Emergency Mortgage Assistance Program (HEMAP) provides loans to cover mortgage payments for homeowners who are in default for at least two months. Homeowners apply through state-approved nonprofit housing counselors, and they can obtain assistance on payments for up to two years. Loan approvals are based on whether borrowers are likely to be employed in the future and can pay off the loans with interest.

HEMAP was created in 1983 with the urging of faith-based organizations, civic leaders and union workers to assist families in possible home foreclosures resulting from a recession and the collapse of the steel industry. Since its inception, 46,000 Pennsylvania homeowners—including 10,800 from the Pittsburgh region—have used this assistance program. It is estimated that HEMAP prevented between 6,100 and 8,800 foreclosures in our state from 2008-2010 alone. Furthermore, a report by The Reinvestment Fund released this month showed that the state investment of $38 million saved taxpayers, neighbors, communities and financial services institutions $481 million.

The Homeowners Emergency Mortgage Assistance Program is supported by state government, however, became a victim of state budget cuts and was closed down on July 1, 2011. Currently, there remains no allocation for this program in Governor Corbett’s proposed 2012-13 budget. Because HEMAP is already law, the program could be re-started almost immediately, delivering additional resources to families in danger of losing their homes and communities struggling with the effects of the difficult economic times.

We are already seeing the repercussions of losing HEMAP. At a time when most U.S. housing foreclosures are decreasing, Pennsylvania saw a nearly 24 percent increase during January 2012. One in every 1,219 houses in our state was in foreclosure during that month. Allegheny County has the second largest number of foreclosure filings in January in the state, with 744 filings.

An increase in foreclosures in Pennsylvania trickles down to individuals who are trying to buy and sell their homes. This level is significant enough to raise the inventory of homes available for sale, which essentially draws potential buyers away from the construction of new homes, resulting in a decrease of jobs available in the construction industry and home building business. In addition, these high levels create a negative atmosphere that suppresses consumer confidence.

At a time when services and budgets are being reduced or eliminated completely and unemployment still remains an issue, people need these assistance programs that will allow them to hold onto their homes while the economy recovers. I believe it is absolutely necessary to take this settlement allocation and reestablish HEMAP and help individuals and their families get back on their feet again.

Senator Wayne D. Fontana

42^nd Senatorial District

www.senatorfontana.com