With the Obama administration searching for ways to help homeowners who become jobless and are unable to pay their mortgage, Pennsylvania has been helping their residents with their own foreclosure avoidance plan.
Pennsylvania’s Emergency Loan
If you’re a homeowner who has lost your job and can’t pay your mortgage, your first thought may be to apply for the loan modification program. If you’re unable to get it, though, you may think your next option is foreclosure. However, it’s not your next step if you are a resident in Pennsylvania. The Pennsylvania Housing Finance Agency has been offering loans to the unemployed for up to $60,000 for up to three years to help pay arrear and current mortgage payments.
Fannie Mae’s Attempt Failed: Why Pennsylvania’s Emergency Loan Works
Are you asking yourself why the government hasn’t done something like this? Well, Fannie Mae tried it with their HomeSaver Advance in 2008, but they saw a redefault increase of 70 percent, which ended the program.
What makes Pennsylvania’s program work? It’s not clear exactly why they have had a better outcome. It could simply be their criteria for loan acceptance. They will not accept homeowners with large credit card debt and will only consider homeowners who have a good chance of finding a job in the next few months. If the homeowner doesn’t find a job in a year, the agency reviews his/her financial background once again before giving out another emergency loan.
About the Emergency Loan
The loan comes with a 5.25 percent interest rate and the homeowner needs to pay it within 10 years. However, if a homeowner is unable to pay it back within that time, there is room for negotiations depending on his/her financial situation.
Photo: pablo.sanchez
