Joyce Moed | Political Samples

Help homeowners across the state keep their homes

By Joyce Moed, Reporter

HARRISBURG, Pa.–The Pennsylvania Credit Union Association is in support of Gov. Ed Rendell’s two new resources to help homeowners across the state keep their homes in the wake of unaffordable adjustable rate mortgages and predatory lending practices.

Rendell’s first resource is: The REfinance to an Affordable Loan, or REAL program, which offers refinancing to homeowners whose adjustable rate or other subprime mortgage has become unaffordable. By combining 100% financing with flexible credit underwriting, the goal of REAL is provide relief for home homeowners with good credit who cannot otherwise qualify for typical refinance programs. A network of 72 lending institutions will handle REAL program loans for the Pennsylvania Housing Finance Agency, which will manage both the programs statewide.

Rendell’s second resource is: Homeowner Equity Recovery Opportunity, or HERO, which offers loans for homeowners who can’t afford their current mortgage payments and are not eligible for other programs that could save their homes from foreclosure. Unlike with the REAL program, HERO loans are made directly by the PHFA, which may negotiate with current mortgage holders to reduce the amount owed on properties. Start-up funding for HERO is being provided by PNC Bank–headquartered in Pittsburgh, the City of Philadelphia, and PHFA. PNC is offering a low-interest loan of $5 million as a loan-loss reserve. Philadelphia is contributing $1 million to support HERO loans made with the city limits. PNC’s below-market interest rate funding will be used by PHFA to originate HERO loans and to leverage a planned bond issue of $25 million that will provide the actual refinancing for loans.

Credit counseling and financial-management education are part of both the programs.

“We think anything that is good for consumers, and good for credit-union members, is a good thing,” said Michael Wishnow, senior vice president of communications and marketing for the Association. “From the Association’s perspective we applaud Kendell for creating these programs because clearly there is a need.”

Pennsylvania’s governor is not the only one hoping to lead their state away from foreclosures.
On Oct. 18, Massachusetts credit-union leaders, leaders of area nonprofit groups and city homeowners joined with Gov. Deval Patrick to unveil the governor’s comprehensive, foreclosure-prevention plan designed to keep people in their homes and to stabilize neighborhoods across the Commonwealth.

Patrick’s five-point plan includes: targeting neighborhood stabilization pilot programs in six Bay State cities, transitioning resources from lenders and servicers, consumer outreach and education, lending best practices, and coordinating to increase utilization of MassHousing’s loan-refinancing program.

Massachusetts’s credit-union leaders were quick to support Patrick’s foreclosure-prevention plan.
“For almost a hundred years, credit unions in Massachusetts have been helping consumers with their financial needs,” said Jim Blake, chairman of the Massachusetts Credit Union League and president of HarborOne Credit Union in Brockton. “Now more than ever we see an opportunity to help during these very difficult times ad would encourage all financial institutions in the state to support the efforts of the governor. Not only is this about securing the financial health of individuals and families, but likewise will prevent the decline of our neighborhoods by reducing the number of vacant, boarded-up buildings.”

The plan calls on participating lenders to provide $5,000 to the housing counseling agency working with an eligible homeowner who loses his or her home to foreclosure or gives a deed in lieu of foreclosure. The transition resources will enable the homeowner to pay for first and last month’s rent and moving expenses. The remaining money will be retained by the nonprofit organization to offset the administrative cost of its counseling programs.

The League is the only financial trade group that has publicly backed the governor’s plan.
Rob Kimmit, senior vice president of marketing for the Massachusetts Credit Union League offered the Credit Union Journal some observations as to how long the foreclosure crisis will last.

“Most of the worst subprime lending abuses here in the northeast seemed to have occurred between 2003 and 2005,” he said. “As those loans re-price due to the expiration of introductory discounts or programmed escalation new waves of financial stress are breaking on borrowers. The question that remains is when do these loans re-price. Right now very few affected borrowers can sell because the neighborhoods with large numbers of predatory subprime loans already have a glut of low-priced foreclosed homes on the market.

“The housing-market situation in these areas is going to be challenging for some time to come.”