Pennsylvania Gov. Thomas Corbett signed a bill last week sending nearly $60 million from the robo-signing settlement to fund loans for unemployed borrowers who put the money to their mortgage payments.
Act 91 of 1983 launched the Homeowners' Emergency Mortgage Assistance Program to be administered by the Pennsylvania Housing Finance Agency. It allows unemployed homeowners to take out up to $50,000 in interest-free loans.
Now additional loans via HEMAP will be funded via the state's AG settlement payout. Borrowers will have to show they have a reasonable chance of resuming mortgage payments themselves with two years.
The settlement between the state, 48 other attorneys general, federal prosecutors and the five largest mortgage servicers sent $66 million in cash to Pennsylvania to use for struggling borrowers. The bill signed last week detailing how settlement funds will be used guarantees 90% of the money will go to HEMAP over five years.
The unemployment rate in Pennsylvania stood at 7.4% in May, down from 8% one year prior.
The program was originally slated to close July 1 because of state budget cuts. The Dodd-Frank Act provided up to $1 billion to fund similar programs in 27 states nationwide, but those programs expired in September.
Pennsylvania will begin taking applications for the rebooted HEMAP on July 1.
"We appreciate the legislature earmarking these funds to aid homeowners," said John Dodds, director of the Philadelphia Unemployment Project. "A number of states used the settlement money to balance their budgets, and that is not what these funds are for."
More than 47,000 families were able to use the program since it launched in 1984.
Under the Dodd-Frank funding, Pennsylvania took in nearly 7,000 applications and approved roughly 44% of them. The state spent roughly $99.1 million in federal money for the program through the week ending Sept. 30.