Federal program helps 500 homeowners in region
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Nearly 500 families facing foreclosure in southwestern Pennsylvania have been able to stay in their homes this year because of a federal emergency mortgage program.
About $13 million will go to help those 500 families in 11 counties. The most -- 271 families -- live in Allegheny County.
In Westmoreland County, 65 families have been helped, getting an average loan of about $27,000.
One Ligonier woman needed the program's help after she lost her secretarial job because of corporate downsizing during the recession. She has lived in her house for 25 years. In 2003, she decided to buy the home and obtained a bank mortgage. But when she lost her job in 2010, her unemployment benefits were not enough to keep up the payments. She defaulted on her mortgage in late 2010.
The woman has been actively seeking a full-time job and has an associate degree in her field, but applications to at least 35 to 40 employers have proven unsuccessful.
A couple from Beaver County who received help faced serious medical conditions.
The husband, who is 70, said they were almost managing to pay their $400 monthly mortgage, but when the economy started to sour, they got further and further behind.
"We tried to refinance, but we were told we couldn't because we were 'underwater,' " he said. That means they owed more on the mortgage, about $83,000, than the property was worth because of falling home prices.
His 67-year-old wife, who was a nurse, had a stroke and had to quit working. The man worked at a fencing business until he was 62; then he had a heart attack and had to quit.
"We wouldn't have our home without this program," he said. "We were very fortunate to be picked." His state lawmaker referred him to NeighborWorks, a nonprofit housing agency in Pittsburgh that helped him apply.
To qualify for the federal Emergency Homeowners Loan Program, homeowners must be facing problems not of their own making. They must be at least three months delinquent on their payments, make less than 80 percent of their previous income and not earn more than $75,000 a year.
Homeowners must contribute to the mortgage payment, based on their income, and send that payment to the state, which then forwards the total mortgage payment to the lender, said Daryl Rotz, an official with the Pennsylvania Housing Finance Agency, who is administering the program, which will help with up to 24 monthly payments.
If the homeowner remains current on the mortgage and stays in the home for at least five years, the loan becomes a grant and does not have to be paid back, Mr. Rotz said.
Statewide, Pennsylvania received $108 million and 3,000 people were assisted under the federal program.
Craig Burkley, chief operating officer for NeighborWorks, said three counselors helped screen applicants for the program in September at the Westmoreland United Way offices near Greensburg.
"No doubt, this federal grant program was the only resource for many people," said Tay Waltenbaugh, director of the Community Action Agency of Westmoreland County, whose agency also helped screen applicants at the community college.
"Our mission here is to eliminate poverty," he said. "And death, divorce, job loss and health issues can send people into poverty. You hate to see people lose their house."
He called the 500 families helped in the region a "pretty significant number."
His agency has a small grant program to help with emergency mortgage needs, and with $30,000 in funds, it has helped about 30 people over five years.
"We can help with two months of mortgage payments or $1,200," he said. "So at the county, we have limited resources to help."
"Many people think we deal only with low-income families," Mr. Waltenbaugh said, "but we help counsel people on developing a plan to stay in their home."
Mr. Waltenbaugh said the county agency will negotiate with local banks to help those who are in mortgage trouble.
"The local banks are cooperative. Banks don't want to lose customers," he said. "It's the out-of-state banks that are the hardest to work with. But the biggest problem is people wait too long when they are in trouble to seek help."
NeighborWorks, like Community Action, provides counseling and budgeting advice to help struggling homeowners.
"We've helped about 800 families in the last year," Mr. Burkley said. "Most of them are in Allegheny County."
The agency's goal is to have a positive outcome for the family -- and that doesn't always mean staying in their home.
"Sometimes, they can sell the home in a short sale," he said.
Banks really don't want to hold the property, he said.
"More and more, municipalities are pressuring the banks and lenders to keep up the properties," he said. "It can cost these lenders between $18,000 and $20,000 to go through the foreclosure process and to hold a property for a year."
In Allegheny County, home-owners also can look to the courts for help.
NeighborWorks counselors will accompany homeowners to a hearing with the lender before a judge. They can help homeowners obtain adjustments to their mortgage.
Mr. Burkley said that while the Pittsburgh region has not had the housing highs and lows that some parts of the country have suffered, the mortgage foreclosure problem is not over.
"We've had a national moratorium on foreclosures by the lenders, from the summer 2010 to fall 2011, while the issue of robo-signing with mortgages was being investigated.
"So lenders have not put all the foreclosed properties up for sale. We believe the foreclosures won't have worked their way through the system until at least 2014."
Mr. Burkley knows the federal loan program is controversial because many of the loans become grants. The program was approved by Congress in the spring, and all money had to be committed by Sept. 30, 2011.
"I don't think it will be renewed," he said.
He would have preferred that the federal program was more closely modeled on the state's loan program, where homeowners must have a plan to repay the loan.
Still, he's happy so many local homeowners have been helped during the recession by the emergency federal program.
First Published January 26, 2012 12:00 am
