WASHINGTON, DC- U.S. Senator Bob Casey (D-PA) today sent a letter to U.S. Secretary of the Treasury Timothy Geithner and U.S. Secretary of Housing and Urban Development Shaun Donovan calling on them to expand the recently announced foreclosure assistance program to include Pennsylvania and other states with effective, innovative programs in place to prevent foreclosures. The $1.5 billion for the program has been allocated from the Troubled Assets Relief Program (TARP) to provide housing assistance for the unemployed in select states, excluding Pennsylvania.
“I was pleased to hear that the Obama Administration has decided to use its authority to direct $1.5 billion in funds from the Troubled Assets Relief Program to housing assistance for the unemployed,” wrote Senator Casey. “I was extremely disappointed, however, to learn that funds will be targeted to housing finance agencies only in states where the average price for all homes in the state has fallen more than 20% from the peak.”
Under the Administration’s current guidelines for state housing finance agencies to receive TARP funding for housing assistance, agencies in just five states would be allotted funds.
In his letter, Senator Casey urged Secretaries Geithner and Donovan to reconsider the criteria for state housing finance agencies to receive funds under this program. He also expressed concern that by limiting the recipients of aid to those who meet a single criterion, the Administration’s approach does not take into account the majority of states where families and communities have suffered from the effects of widespread foreclosures.
As an example of the foreclosure problems Pennsylvania has faced, Senator Casey noted that from January of 2009 until January of 2010, the number of foreclosure filings nationwide increased by 15%. During that same time period, the number of filings in Pennsylvania increased by 38%.
The full text of the letter is below.
Dear Secretary Geithner and Secretary Donovan:
Thank you for your public service during this difficult time for Americans who have lost their job or their home within the last few years. I was pleased to hear that the Obama Administration has decided to use its authority to direct $1.5 billion in funds from the Troubled Assets Relief Program (TARP) to housing assistance for the unemployed. Widespread unemployment will contribute to a second wave of home foreclosures following the initial subprime mortgage.
I was extremely disappointed, however, to learn that funds will be targeted to housing finance agencies only in states where the average price for all homes in the state has fallen more than 20% from the peak. By limiting the recipients of aid to those that meet this single criterion, the Administration’s approach fails to take into account the vast majority of states where families and communities have suffered from the effects of widespread foreclosures. It also does not examine the capacity of each agency to spend money quickly in collaboration with state and local governments and housing counseling agencies.
As stated by both of you in the Treasury’s announcement, the goal of this program is to promote innovation. In my judgment, funds are best directed to programs with proven records of effectiveness. I know that your staff has met with advocates in Pennsylvania who have shared with them the enormous success of the Homeowners’ Emergency Mortgage Assistance Program (HEMAP) which the Pennsylvania Housing Finance Agency (PHFA) has administered since 1983. HEMAP is specifically designed to help homeowners who have suffered temporary income loss due to loss of employment or a health crisis, but who are likely to be able to afford their monthly mortgage payments in the future. Since the program’s inception, it has disbursed a total of $450,000,000 and helped more than 43,000 people stay in their homes. Last year, the Pennsylvania Housing Finance Agency received 14,000 applications, but could only assist 3,250 people due to limited resources. Other states have implemented the HEMAP model, and I have introduced legislation, the Homeowners Relief and Neighborhood Stabilization Act of 2010, to establish a federal program.
Despite our best efforts to date, the federal government’s response to the subprime mortgage crisis and subsequent rising foreclosure rates has been inadequate. In January 2010, the number of foreclosure filings nationwide was 15% higher than in January 2009. In Pennsylvania, filings increased over that same one year period by 38%, and were up nearly 6% from December 2009. There are a number of other states where either high capacity for innovation or high rates of unemployment would warrant inclusion in this new distribution of funds.
I urge you to reconsider the criteria by which these funds will be distributed. It is deeply troubling that states that chose to pursue innovative approaches to addressing the foreclosure crisis in a timely manner and have worked to build capacity will be shut out from federal funding and denied the resources to continue their efforts. I look forward to discuss this matter with you in the future. If you or your staff have any questions, please contact Bryn McDonough on my staff at 228-5024.
Thank you for your consideration.
Sincerely,
Robert P. Casey, Jr.
United States Senator
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