Rendell Pushes Mortgage Aid Plans
|October 30, 2007|
PHILADELPHIA —(AP) -- Gov. Ed Rendell gave a big push Monday to two state programs designed to give relief to homeowners victimized by predatory lending or facing unaffordable increases in their mortgage payments.
Rendell, flanked by city and state officials, said the subprime mortgage crisis that’s plaguing the nation has reached Pennsylvania homes.
The state programs — called Refinance to an Affordable Loan, or REAL, and Homeowner Equity Recovery Opportunity, or HERO — have been around since summer and were crafted by the Pennsylvania Housing Finance Agency.
Seventy-two lenders have joined the REAL program. It helps homeowners refinance loans that have become unaffordable because their interest rates have been readjusted much higher than the borrower expected or because the borrower didn’t fully understand the terms of an exotic mortgage. The refinanced loans are 30-year fixed-rate mortgages at 7.375 to 7.625 percent.
HERO is designed for homeowners who are in trouble and can’t refinance or qualify for the REAL program. PNC Bank, a unit of PNC Financial Services Group in Pittsburgh, is offering $5 million in loans at below-market rates to the state agency. The agency will purchase the homeowner’s troubled loan and set up a repayment plan at an interest rate of 7.95 percent.
The profit from the PNC rate spread will be used toward a reserve for loans that default. The city of Philadelphia is also contributing $1 million toward the loan-loss reserve. In addition, the state agency is planning to issue up to $200 million in bonds in $25 million increments.
Rendell said he hopes more companies will join PNC in providing capital.
On the Net: Pennsylvania Housing Finance Agency REAL and HERO programs: http://www.phfa.org/consumers/homeowners/real.aspx
Source: Pennsylvania Housing Finance Agency (AP)