The way Philadelphia foreclosure listings are being contained by the city and state governments is being studied by the Obama administration for its plan of further improving its foreclosure prevention program.
Federal officials are considering using part of the $50 billion allotted for the loan modification program to help jobless homeowners keep their homes.
Elizabeth Warren, chairperson of the Congressional Oversight Panel which oversees the Troubled Asset Relief Program, has been asking the Treasury Department to examine the use of some TARP funds to provide bridge loans to homeowners who have been laid off in recent months. She suggested also that the program does not charge interest until the homeowners get another job.
COP member Richard Neiman explained that recent foreclosures are no longer caused by subprime or other types of risky home loans, but by unemployment. He added that the rising number of prime mortgages getting foreclosed is an indication of the worsening impact of unemployment.
In September, job losses increased to 9.8 percent, pushing up the national unemployment rate to 9.8 percent, a 26-year record high. Since December 2007, a total of 7.2 million workers have been laid off and the jobless rate has doubled.
Administration officials have been looking at the program that has been effectively containing Philadelphia foreclosure listings and other listings throughout Pennsylvania under the state Homeowners Emergency Mortgage Assistance Program.
HEMAP was established by Pennsylvania state officials in 1984 to help jobless homeowners survive while they look for jobs. The unemployed homeowners who qualify under the program are given loans with a term of two or three years, depending on the economic conditions and the financial situations of the homeowners. The borrowers are not required to pay the loans until they get their next jobs and earn enough that enables them to pay their monthly home loan payments and utility bills.
John Dodds, head of the Philadelphia Unemployment Project, said that helping the unemployed while they look for work prevents unnecessary foreclosures that cause neighborhood deterioration.
According to reports, several officials of the U.S. Housing and Urban Development Department have met with state officials of Pennsylvania and discussed the HEMAP and its viability as a nationwide program.
In addition, officers of the Philadelphia Legal Assistance Center explained that the HEMAP program is provided only to qualified unemployed, such as persons who have been laid off recently and who are likely to find another job.
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