Sen. Vincent J. Fumo

District Office

1208 Tasker Street
Phila, PA 19148

Harrisburg Office

545 Main Capitol
Hbg, PA 17120



_____________________NEWS RELEASE
State Senator

1st Senatorial District
Democratic Appropriations Committee Chairman
Room 545 Main Capitol, Harrisburg PA 17120
Internet Website:

PHONE: 717-787-5662 


     HARRISBURG, January 30, 2002 Ė Because of difficult economic times and the recent rise in unemployment in Pennsylvania, the state should restore funding to a program that helps people pay their mortgage when they lose their jobs, state Senator Vincent J. Fumo (D-Philadelphia) said today.

     Fumo, the Democratic chairman of the Senate Appropriations Committee, promised to make the Homeowners Emergency Mortgage Assistance Program (HEMAP) a top priority in the upcoming budget cycle.

     The fund provides temporary assistance in the form of a loan for working people who lose their jobs. When the workers find new jobs, they repay the loans. Since changes were made to the program and the General Fund appropriation was eliminated in 1998, participation has fallen significantly, despite the fact that applications have risen during the past two years because of the slowing economy.

     "The need for this program has been increasing lately. Although I realize that it will be a tight budget year because of the weak economy, thatís exactly when this type of aid is in greatest demand," Fumo said.

     Prior to 1996, the state budget contained a line item appropriation of $18.5 million for HEMAP. That year, however, then-Gov. Tom Ridge proposed eliminating the annual appropriation. The General Assembly approved line-item funding at reduced levels for two more years, but the 1998 budget finally ended the appropriation. HEMAP has since survived only on the money from repaid loans, with tightened loan eligibility requirements.

     Fumo and other Democrats opposed the elimination of the appropriation.

     Lately, however, Ridge and Gov. Mark Schweiker have demonstrated keen awareness of the important role that the state should play in making sure that a change in employment situation does not disrupt a familyís home life. Although Ridge left state service to take a position as head of national homeland security, he has accepted a state offer of rent-free living in the governorís mansion for nearly four months.

     "Obviously, the leaders of the administration now recognize that when the primary breadwinner experiences a dramatic or sudden change in his job situation, the government can help prevent the family from winding up out on the street," Fumo said.

     "If we can provide a grant to Tom Ridge just because he changed jobs, surely we can provide a loan to working-class men and women who lose their jobs," he added.

     Although requests for help from HEMAP have increased each year since 1997 and hit a record level in 2001 as state unemployment rose, both the number of loans approved and the dollar amounts of those loans have declined over the past five years.

     In 1997, HEMAP received 5,928 applications for help. It approved 2,093 loans and disbursed $18 million. By 2001, despite receiving an all-time high of 8,381 requests, HEMAP shrank to 1,710 loan approvals and disbursed only $11.5 million.

     "Clearly this program is headed in the wrong direction," said Fumo. "At a time when more people are finding themselves out of work, the state should be helping more people save their homes. It is time we add more money to the HEMAP fund, so that fewer unemployed families Ė some of whom are probably economic victims of the Sept. 11 terrorist attacks Ė are kicked out of their homes."

     HEMAPís fund balance, which stood at $5.6 million as of July 2001, is projected to fall below $3.2 million by the end of this fiscal year. If demand for loans continues to grow, it could run out of money by 2003.

     Fumo said he will propose restoring the line item to at least a $10 million annual appropriation. In addition, he will seek legislative changes that will reverse the more stringent eligibility requirements enacted several years ago.

     In particular, Fumo said he will advocate a return to giving borrowers 36 months of assistance instead of 24, at a cost of $5 million annually. Another $5 million would go toward ensuring the programís solvency through 2004.

     Nearly 80 percent of applications for HEMAP assistance were rejected last year. Although some were legitimate denials, Fumo hopes the additional funding would encourage more compassionate lending decisions that would result in another 350 families per year being served.


     HEMAP was established in 1983 to provide mortgage assistance to homeowners attempting to avoid losing their homes through foreclosure. Eligibility limits restrict aid to those facing foreclosure due to the loss of employment or other circumstances beyond their direct control.

     Since its inception, HEMAP has received $177 million in state General Fund support, but none since the 1997-98 fiscal year. HEMAP has enabled more than 28,000 families to save their homes.

     The second Ridge budget, introduced in February of 1996, proposed elimination of any future General Fund support for HEMAP, which had received $18.5 million the previous year. The General Assembly eventually approved a $3 million appropriation that kept the program operating at reduced levels.

     The Pennsylvania Housing Finance Agency (PHFA,) which administers the program, prepared to shut down HEMAP because of lack of funds, but the General Assembly approved a $10 million appropriation in 1997-98.

     Act 160 of 1998 made substantial changes to the program to reduce the amount and time period of financial assistance, and to further restrict eligibility. The curtailed program then became self supporting through loan repayments, and General Fund support ceased.

     The Act 160 changes restricted eligibility to loans that were delinquent 24 months or less. The previous limit was 36 months. Assistance could continue for 24 months, reduced from 36 months. Also, payback provisions were amended to require loan recipients to begin repayment as soon as their housing payments did not exceed 40 percent of their net income. The previous ceiling was 35 percent.

     In 1996 when Ridge first called for the elimination of the HEMAP appropriation, he made other major budget cuts, including a dramatic reduction in health care coverage. He took Medical Assistance away from several hundred thousand poor Pennsylvanians, claiming his budget would have a $250 million deficit if those cuts were not made. The state actually ended that fiscal year with a $576 million revenue surplus.