predatory lending

Predatory Payday Lending Bill Flies Out of Cramped PA House Committee

By Mark Price, Third and State

Room 148 of the State Capitol might as well double as a Capitol broom closet. That's where the House Consumer Affairs Committee this morning rushed out amendments to House Bill 2191, which legalizes predatory payday lending in Pennsylvania.

The amendments to HB 2191 were misleadingly pitched as adding more consumer protections to the bill. Even the Navy Marine Corps Relief Society took a look at these amendments and said they do "nothing to mitigate the already harmful aspects of HB 2191," and that one amendment "actually worsens the problem it claims to solve."

One focus of the amendments this morning was language banning renewals or rollovers of a payday loan, as if that was a solution to stopping the long-term cycle of debt. It is not.

Let's Play a Game! (The Vince and Dwight edition!)

Let's play a game! I call it, What is Dumber? I think the rules will be clear pretty quickly!

OK, OK, what is dumber?

A) Your hometown is being crushed under a tidal wave of predatory lenders. In response, your City Council passes a bill to protect Philly homeowners. However, even though you are from that City, you kill the law, and let the market feast on vulnerable consumers for years more. You say at the time that if more regulation is needed, you will provide it. Years go by, 40,000 foreclosures are filed in your city. And you do nothing. (This would be the Dwight Evans/ Vince Fumo approach from 2001.)

B) Fast forward 7 years, the house of cards that is Wall Street has finally fallen. The Federal Government now looks like it will provide a 700 billion dollar golden parachute for stockholders and CEO's. Meanwhile, those homeowners who haven't been foreclosed yet have their only real hope coming from local advocates, City Council/the Mayor, and a couple creative Judges who have banded together to help them. In response, rather than pitching in to help your constituents (you know, the ones you screwed 7 years earlier), you legalize a Wall Street industry ripe with fraud, with an entire business model focused on going after vulnerable homeowners. (This is the Dwight Evans approach from 2008, as we wait to see if Vince joins in.)

So, quiz: Which is dumber?

(And hey Fumo, is this really what want your last bill to be?)

Dwight Evans and Co. Expose Struggling Philadelphians to the Next Generation of Financial Predators

This weekend, two Wall Street institutions, Merrill Lynch and Lehman Brothers, collapsed, mostly because of their dealing in subprime lending. Lehman Brothers, in particular, stirs memories because they worked hand in hand with one of Philadelphia’s most notorious predatory lenders of the late 1990's: United Companies Lending. With the help of Lehman Brothers, UC Lending cut a swath through working class neighborhoods, sending scores of Philadelphians into foreclosure.

The destruction caused by UC Lending and others was bad enough that City Council did something about it, and passed strong anti-predatory lending legislation. But, as I have documented before, in a fight led by our own Dwight Evans, the State Legislature killed the bill, offering faux regulation. Since then, upward of 40,000 foreclosures have been filed against Philadelphia homeowners.

40,000 foreclosures. The timing then, of this, is almost too shameful to be true:

Suppose you're in a financial jam. You've maxed your credit cards, they're about to repossess your car. Then you see a cable-TV ad offering one easy payment to pull you out of the mess.

Good idea? Maybe, maybe not.

Consumer activists and nonprofit credit counselors are alarmed about a bill primed for passage in the state Legislature that would permit for-profit companies to offer credit counseling in Pennsylvania.

The bill would also limit fees and impose state licensing requirements for nonprofits as well. But consumer advocates say opening the field to private firms will end up putting thousands of financially strapped Pennsylvanians into plans that only get them further in the hole.

"Consumers need to be getting advice from disinterested parties who can give them the best options," said Patricia Hasson, president of the Consumer Credit Counseling Service of the Delaware Valley.

The consumer vultures of America, finished feasting on predatory mortgage loans, rapid refunds, and payday loans have found their next product. Despite the fact that they so poisoned our cities that their demise is killing Wall Street, here they come again, seeing what scraps they can pull from financially troubled Pennsylvanians.

And who, by chance, do you suspect is paving their way into Pennsylvania?

Democratic Philadelphia state Rep. Dwight Evans, the prime sponsor of the credit-counseling bill, said it's designed to bring licensing and consumer protections to an industry that is effectively unregulated in Pennsylvania.

He said the nonprofit agencies that want to keep private companies out of the credit-counseling business are denying consumers choice and the benefits of competition.

"I'm tired of people who assume that people who use this service are not smart enough to make good choices," Evans said. "It's a patronizing attitude, that we have to save people from themselves."

"Our job in government is to set standards and provide for regulation, and that's what we're doing in this bill," Evans said.

That quote sounds familiar… sort of like this one, in a letter to the editor Evans sent to the Daily News as he was in the process of killing our predatory lending bill, in 2001:

To call it anti-consumer misses the complexity of this issue. The best way to stop predatory lending practices is to give teeth to the state Department of Banking.

This is not a function of local government. House Bill 1703 provides the Department of Banking with extensive enforcement authority. We must not close off sources to those who need loans most.

For all the good he has done, Dwight Evans has a terrible, and shameful history of exposing struggling Philadelphians to financial predators. And now, right as Wall Street and the American economy collapse under the weight of predatory loans that he helped protect, there he goes again.

The bill, a wolf in sheep's clothing, passed unanimously in the State House. (Here is looking at you, Josh Shapiro, Babette Josephs and Tony Payton.) It is now before the State Senate. To our State Senators, as you consider this bill, I have to ask: Given the history here, as Dwight and the financial predators line up against every consumer group in the state...

Who do you trust?

Give Loan Modifications a Chance: Philadelphia's innovative plan, for homeowners and for lenders

Judge Darnell Jones anounced an innovative plan to stem foreclosures in Philadelphia Wednesday. Philadelphia homeowners will have a chance to modify the terms of sub-prime and predatory loans so that they can again afford the payments. It's a modification, not a re-finance, which means that they don't have to reapply or accrue new settlement fees. The lender simply agrees to lower the interest rates and change the terms on the existing mortgage. The deal only applies to owner-occuppied residences. It also only applies if the owner-occupant takes advantage of the court-mandated opportunity to meet with attorneys for their lender within 45 days of the foreclosure filing. If they don't, foreclosure will proceed like it always does.

In Harold Brubaker's story on the deal in yesterday's Business Section of the Inquirer, Tobi Walker of the Pew Charitable Trusts said, "This is one of the more innovative approaches we've seen."

The situation for lenders has been bad enough that they have been willing to pursue modifications with homeowners, but the process has been so cumbersome that many homeowners have still lost their homes because the foreclosure moved faster than lenders' workout staff could get through the volume of cases. Philadelphia advocates had a key insight: we have a large workforce of housing counselors available and willing to manage the lion's share of the modification process, if only the lenders would agree to give them that authority. Now, the court is requiring it.

Common Please Court has made this happen procedurally. It now simply requires lenders to give homeowners the opportunity to modify loans before permitting a foreclosure to go forward in court. There's no case or decision to look up. The court has simply changed the way it conducts the business of foreclosure.

Here's how it happened: late last year The Philadelphia Unemployment Project began calling Philadelphians holding mortgages through Countrywide. We invited them to meet as a group with our housing counselors, discuss their options as individuals and ask them to join with us as a group to press for a better deal through our Foreclosure Crisis Committee. Then, in December, the Save Our Homes Coalition convened in the PUP offices. Community Legal Services, ACORN, Philadelphia Legal Assistance and various Housing Counseling Agencies from around the city.

Meanwhile, the whole economy began teetering badly as the collective misjudgement of America's housing market by the world financial industry became apparent. Click read more to find out the rest of the story.

Tell Arlen Specter to Help Save Homes

There is currently a bill in the US Senate dealing with the predatory lending crisis, and there is a small provision in it that is really important to keep. The provision lets judges who preside over bankrupt homeowners modify terms of loans to make them affordable. Back before we started selling homeowners down the river, this was the law. Let's just say the changes have not yielded positive results.

This bill would protect an estimated 600,000 people, and save homeowners surrounding foreclosures an estimated 72 billion dollars in lost home values. And, it costs us nothing. It simply gives judges the latitude in bankruptcies the same latitude they have if you showed up to bankruptcy with other assets- like investment income, a boat, etc.

This is a sensible, win-win measure that could be really, really important to keeping people in their homes. And right now, Arlen Specter is a key vote in getting this out of the Senate. (A companion bill would likely pass the House.)

I just called Arlen Specter's office, and I would strongly encourage you to do the same. All you have to do is say something like this:

I encourage Senator Specter to support the Durbin Bill- Title IV of Senate Bill 2636, to allow modifications to mortgages in the bankruptcy process.

His phone number is (202) 224-4254, and your one minute call can really make a difference.

Below the fold, is a memo from the Center for Responsible Lending about why this bill is so important. One minute can make a difference.

Call today!

Hey Dwight: Stop Foreclosures, and Give us Back the Right to Protect Ourselves

In 2001, as readers of the blog know, City Council passed a great anti-predatory lending bill.

The bill was a wonderful example of activism (ACORN, that Irv dude and CLS), media (Paul Davies at the Daily News, along with their Ed Board) and City government staff (like Derek Green) and Council members (like Marian Tasco) coming together to do something really great.

But then, in an effort led by Tasco's BFF, Dwight Evans, the state crushed Philadelphia's bill, and took away our power to do anything with regulating lending at all, by passing Act 55.

Talking about Act 55, and why he was about to kill the Tasco predatory lending law, Evans said the following (Daily News, June 12, 2001):

He was not convinced predatory lending was a widespread problem or that more legislation is needed.

"If this is a problem, I question if more laws are the answer," Evans said.

In reality, by 2001 there was no question that predatory lending was an issue. For the previous four or five years, mortgage foreclosures were skyrocketing in Philadelphia, including in the neighborhoods that make up Evans’ district. In the previous year alone, more than 5,000 foreclosures were filed in the City.

A week later, after the Daily News editorial board excoriated him for killing our predatory lending bill, Evans wrote the following in a letter to the editor (June 19, 2001):

I suggest you take your own advice and read the actual legislation. It contains the provisions you call for in your editorial (June 13). In places, it is actually more pro-consumer than what city officials are promoting.

House Bill 1703 offers strong restrictions that will provide unprecedented equity protection for homeowners. Moreover, it prohibits some practices associated with predatory lending.

To call it anti-consumer misses the complexity of this issue. The best way to stop predatory lending practices is to give teeth to the state Department of Banking. This is not a function of local government. House Bill 1703 provides the Department of Banking with extensive enforcement authority. We must not close off sources to those who need loans most.

I don’t like to call people liars, so lets just say that there was a lot of obvious and deliberate BS in that letter. His preemption bill did nothing except expose too many Philadelphians to subprime, predatory lenders. The fact that they were pretending it was somehow helping only made it a more bitter pill to swallow.

And then, three days later, the bill officially passed, and Evans said this:

Evans said that if the bill did not go far enough, changes can be made.

"This is not the end, only the beginning," he said.

It sure was only the beginning. From 2002 through 2007, 34,000 foreclosures were filed in Philadelphia.

And, I think it is only going to get worse.

The trends in both foreclosures, and subprime lending, are not good. In fact, in 2007, foreclosure filings were back to their peak years of 2002-2003:

Given everything I have seen in the number of adjustable loans that are resetting, 2008 will almost certainly be higher than any year on record. (For us, with a long-term, huge foreclosure problem, that is a big deal.) The economy is getting crappier, the housing market is going down, and in recent years the market share of subprime lending has only been growing:

Why do I go through all of this? Because today, Dwight's fellow member of his NW Philadelphia political coalition- Marian Tasco- has said that we should put a moratorium on Philadelphia foreclosures Sheriff Sales.

That is absolutely wonderful, and a great idea. There should be a freeze in foreclosures while federal, state and local governments figure out just what to do.

The article notes a problem though...

Other observers suggested the city does not have the authority to interfere in sheriff's sales, which may invoke the state's sole authority to regulate the banking industry. One of the sheriff's main jobs is to facilitate the selling of foreclosed property, for both lenders and borrowers.

The state's sole authority to regulate banking? Guess what bill that was? Yeah, good old Act 55.

In other words, the City will be sued if they issue this freeze. They may, or may not win that suit, and they should certainly try, and see what happens. But the reason this is even an issue to begin with, and why Marian Tasco may again be foiled, is because her biggest political supporter, Dwight Evans, took away the right of City Council to protect Philadelphia homeowners.

It is time for Dwight to get us that power back.

News and Notes

I have been pretty busy over the last few weeks, and haven't been able to touch on as much as I wanted, so I thought I would give a quick round-up of some random things worth noting. Most of this is stuff I would like to (and still may) write more on, but have not had the time.

1) As Helen noted earlier, Arlen Specter has come out swinging for Philly, in the Carl Greene vs. HUD pissing match. That is good news. Specter passed a 'Sense of the Senate' (read:non-binding) resolution demanding that 50 million go back to HUD PHA. HUD can simply ignore it, and as the article notes, they are hinting they might do just that. At that point, Specter and Bob Casey Jr. can probably be more assertive. Kudos on this, Senator Specter.

We don't talk about Arlen very much. However, let me just say that I think he is a total joke. Is that wrong to say now? I know that occasionally Arlen burps out a decent vote (like SChip). But I cannot take his faux-moderation, which he uses to certify radical Supreme Court Jurists like Sam Alito, and to toothlessly go along with the war, with torture and with just about anything Dubya wants. He will once in a while roar, but like his conduct with the present and past Attorney Generals, there is not much behind the curtain.

But hey, he does use that same Judiciary platform to inquire into whether the Patriots cheated in the Super Bowl...

My random prediction is that Arlen loses to Pat Toomey in a Senate Primary in 2012, who then promptly loses himself, to someone like... Mike Nutter.

2) There was yet another attack on the ethics boards right to regulate campaign finance reform. This time, the lawsuit is by Cozen O’Connor, basically as an attempt to help Bob Brady pay legal bills out of Tom Knox’s challenge to him.

So, lets see here… We have Bob Brady almost getting kicked off of the ballot, because of a type of technical mistake that the party loves to go after. Does he come out and try and help end the practice, seeing the faults of his ways? (Remember this post? "Will Congressman Brady Now Help Us End Gotcha Ballot Challenges"). No, instead he gets Cozen to represent him, and then afterwards, instead of working to fix it... they go after campaign finance? Awesome.

I will have more soon, but, I suspect the case will be thrown out for lack of standing.

3) On a predatory lending/mortgage foreclosure note- it is bizarre to see big ol Bear Sterns fail, almost exclusively because of their involvement in subprime lending. Way back in 2001, I started doing a little research on foreclosures in Philadelphia. Even back then, you saw a lot of Bear Sterns as the foreclosing entity. And now, they have failed. I have no yay or nay for that fact that they were bailed out, but it sure would be nice if you government put that much care into… people.

Like Countrywide and New Century and so many other subprime lending failures before it- a ‘market correction’ that puts these lenders out of business it not a particularly new idea. See page 61 of Lost Values, for example. However, the same point remains there: a market correction and/or a bailout may ‘solve’ problems for Wall Street, but none of that stops an ongoing wave of foreclosures in our, and every other, City in the US.

4) I have seen the Obama campaign in three places around the City so far, registering people to vote. Very cool. As they note over there-->, you must register to vote by next Monday in order to be able to vote. If you know of anyone who needs to do this, git ‘er done.

5) Finally, thanks to Alex and Drupal: for those who have not noticed, there is now a small editing function when you write a blog entry that allows you

  • to bullet;
  1. make lists;

use bold, use italics, and embed links, all with just a click. (Make sure that you use "http" when you put those links in.

Oh, and it lets you do what all those on blogs love to do:

Easily Quote Yourself.

Hopefully that will be helpful.

Subprime Lending in Philly: Same Old, Same Old

Today the Federal Reserve cut interest rates by .75 of a percentage point. Everywhere you look, the subprime lending crisis appears to be hurtling the US into a recession. Newspaper stories talk about cities having to deal with epidemics of foreclosures. While all of this is true, the whole thing is a useful exercise in looking at where the media priorities of the big national newspapers lie. Because, while cities across the Country are certainly experiencing high levels of foreclosures, in reality, they are not much higher than they have been for years. In other words, yeah, subprime lending is hurting us, but, it has been hurting us for plenty long before now.

One way to measure foreclosures is to look at foreclosure filings per 1000 owner-occupied homes.

These are the rates of foreclosure in Philly per 1000 owner-occupied homes (2000-2003 numbers here):

2000: 14.6
2001: 17.1
2002: 18.2
2003: 18.1
2004: 16.1
2005: 15.9
2006: 16.4

I don't have 2007 numbers, but, I suspect they will not be higher than 2002-2003, when the wild-wild west world of 1998-99 loans were all coming through the foreclosure pipeline. Does that mean Philly is not hurting? Certainly not. But simply, it is nothing new. For example, in 2005, I rode around Philly with a reporter who wrote this:

PHILADELPHIA -- To walk Thayer Street in northeast Philadelphia is to count, door by door, the economic devastation afflicting a working-class neighborhood. On a single block, 18 of the 42 brick rowhouses have gone into foreclosure in the past three years.

There's Marciela Perez, who fell ill with cancer, lacked health insurance and stopped making mortgage payments. Barrel-chested Richard Hidalgo, who got divorced and could no longer make his monthly nut. And Mike O'Mara, a rawboned and crew-cut truck driver who took on too much debt, lost his job and fell behind on his mortgage.

"Mortgage companies convinced us to refinance, and each time our bill went up," O'Mara said as he surveyed his narrow street from his shaded front porch. "You fall behind and they swoop down on you."

Philadelphia, its suburbs and indeed much of Pennsylvania have experienced a foreclosure epidemic as low-income homeowners take on mortgage debt they cannot afford. In 2000, the Philadelphia sheriff auctioned 300 to 400 foreclosed properties a month; now he handles more than 1,000 a month. Allegheny County, which includes Pittsburgh, had record auctions of foreclosed homes, and officials speak of a "Depression-era" problem. The foreclosures fall particularly hard on black and Latino families.

In a TRF study on Predatory Lending (full disclosure: I worked on both reports), for example, one neighborhood that was closely examined- Harrowgate- had about 173 foreclosures per 1000 owner-occupied properties for the years 2000-2003. To me, at least, that is a stunning amount of foreclosures, and we are talking about a time period from up to eight years ago.

Because of the advocacy community in Philly- groups like PUP, CLS, ACORN, etc., because of a progressive minded Secretary of Banking under Rendell, because of having TRF located in Philly, because of the Daily News and Marian Tasco taking on predatory lending in... 2001, this really, truly, is nothing new. Yet, to read the New York Times, this phenomenon is like nothing before.

Part of this is that the pain of subprime lending is reaching new communities, and that the Wall Street house of cards is falling, so it is having a more mainstream effect. However, even that could have been forecasted, considering that it has long been routine for the biggest subprime lenders to go out of business after ravaging communities. The difference now is that mainstream lenders- Countrywide, Citi, etc., and mainstream investors- Bear Sterns, Morgan Stanley, etc have woven themselves deep enough into the morass, that just about everyone is paying attention.

However, for the average Philadelphian, has much changed? No. The crisis that we had before is the same crisis we have now. The only difference is now, the national media is 100 percent fixed on the problem.

But, Philly still has a great predatory lending bill on the books. All that would have to happen for it to take effect would be for Dwight Evans and Vince Fumo to undo Act 55- the State preemption bill. What do you say, fellas? Want to undo some of the damage you wrought?

Lies your mortgage company tells you (when you go to meet with them en masse)

So you've led an angry crowd of homeowners to the doorstep of a mortgage company demanding LOAN MODIFICATIONS NOW that freeze your loans at their teaser rates forever. He says, "No can do. I'm legally bound by investors in the secondary market."

Is that true? It might not be. I don't 100% get it, but I might have made some progress today. Wanna see what I think I found? I know you do. Come along!

Harold Brubaker wrote a pretty good analysis of Collaterallized Debt Obligations today in The Inquirer, which are the means by which many mortgage holders have spread around the risk of sub-prime mortgages. I say "pretty good" because I read it three times today before I started getting my head around it. Then I went to Wikipedia and read about the darn things there.

Let me try to put it my way (which might also be wrong, but what the heck), and, more importantly, point out that these things don't work quite the way that the mortgage industry has described. In other words, a teaser freezer seems much more legally feasible than the Greedniks care to admit.

I got your clarity right here: click read more now!

Hey Philly Reps: Don't Sell out Struggling Homeowners to Protect Wall Street

Around the blogosphere the last couple of days, there has been talk of Barney Frank’s predatory lending bill that is supposed to come up for a vote on Thursday. The thought is that this is one of those below-the-radar, complicated things that we should get behind and cheer.

True, what is going on is below the radar. But, unfortunately, that is because the sainted Barney Frank- along with the Dem controlled Congress- is on his way to selling out distressed homeowners, all on behalf of immunizing the biggest culprit in the foreclosure crisis: Wall Street.

Yesterday, I had my dad write on OpenLeft why he recently got into an heated argument with Frank, and why this bill needs to be stopped. It was adapted from a letter that he sent to our Philly reps on why this bill is a bad idea.

The punchline is that Philly Reps, with thousands of constituents going into foreclosure, need to help stop this bill:

1) It is America's homeowners, not the investment machinery that has caused the current crisis, that need protection.

The Frank bill does define new and important standards in mortgage lending. However, two of the most important restrictions--on lending without regard to repayment ability or "net tangible benefit" to the borrower--Chairman Frank has apparently decided to immunize holders of the loan from any of the remedies that would apply to these two restrictions. In other words, as long as you didn't actually make the loan, you are not responsible if it later turns out that these new standards were violated, that, for example, the borrower is a senior citizen on Social Security and that the loan was unaffordable or purposeless from the beginning.

This makes no sense. It is my experience that the original lender is NEVER the entity that is foreclosing, and is often out of business at the time the abusive quality of the loan is discovered. To be meaningful, any lending standards applied to the front end of a loan must be enforceable against subsequent holders of the loan, particularly when the homeowner is being threatened with a foreclosure. Given that it is precisely the secondary market that has driven the demand for the abusive loans now going bad, it is unconscionable that this very market would be protected from irresponsible and destructive lending practices.

The long and short of it is that much of the foreclosure crisis lies at the feet of Wall Street. Insulating them from any responsibility, while going after mortgage brokers is a little like protecting drug cartels while going hard after low-level drug pushers. Sure, the dealers might be guilty, but does it make sense then to protect the people at the top of the organizational pyramid? Make no mistake, without Wall Streets recent (last 10-15 years) heavy involvement in the mortgage market, this crisis does not exist. And, given that loans are instantly sold off once they are made, these protections will in fact help Wall St. keep on looking the other way when the next abusive loan product comes down the pike.

So, no going after Wall St, the cartel that caused the crisis. Well, at least while Congress has sat on its ass for the last ten years, activists have made headway on the State level, so we still have state remedies... Ooops, not anymore:

2) The mortgage industry itself is using this bill a vehicle to provide Wall Street and investors pre-emption against the state laws that have, in the absence of Congressional action during all these years, provided the only legal protection against predatory lending.

Currently, the Frank bill not only insulates the secondary market from the new ability-to-pay and net-tangible-benefit standards, but also, amazingly, pre-empts any state law that currently provides such protections as against secondary holders. Many states, such as North Carolina and New Jersey, have passed laws providing protections in those areas. The industry is now trying to crush those laws. Here in Pennsylvania, the Banking Department has announced a new regulation that would prohibit mortgage lending that occurs without verified evidence of the borrower's ability to repay the loan. This is the first state effort to address the problem since the legislature pre-empted a strong, Philadelphia anti-predatory city ordinance in June 2001. This important first step will hopefully remove from Pennsylvania the scourge of the so-called "no-doc" loans where income is fabricated on a loan application the broker or lender gets the borrower to sign at the closing table. My hope has been that this new regulation would create a foreclosure defense in those circumstances where that occurs. If the Frank bill passes, however, that defense may be pre-empted-at least that's what the foreclosure firms will argue.

Insulating the secondary market is the wrong thing to do. And at the very least, more expansive protections at the state level should be encouraged, not destroyed. While the GOP Congress spent years ignoring the issue, advocates and activists worked hard all over the Country to tackle predatory lending. The irony of a Democratic Congress now pre-empting our efforts is a bitter bill to swallow. Please help us insist that there is no federal preemption of our laws. If this kind of preemption is the quid pro quo for a federal bill, then I say, to hell with a federal bill.

The GOP Congress did not act. In response, activists around the Country made important headway. And now, Barney Frank, the supposedly wonderful progressive Representative from Massachusetts is going to sell out current and future struggling homeowners by preempting those State laws.

This is not sexy stuff. Neither was the Bankruptcy Bill. But make no mistake about who this bill protects.

Reps Brady, Fattah, Schwartz, Sestak and Murphy: Please oppose this bill.

Inquirer editorial on the need for a homeowner rescue fund

The Inquirer today has an editorial calling for help for struggling homeowners. It mentions a rescue fund that Rep. Dwight Evans and Rep. Pete Daley called for here in Philadelphia back on May 11th. I testified on behalf of PUP on the need for such a fund at a hearing that same morning.

Status report from the editorial. Basically, still at Square One:

The Homeowner's Equity Recovery Opportunity (HERO) program, is intended to help homeowners in the direst situations, including where, because of inflated appraisals by lenders or a fall in housing values, the amount of the mortgage is larger than the value of the house.

Brian Hudson, who heads the Pennsylvania Housing Finance Agency, which created HERO and a separate "refinance fund," still hopes to receive state money.

For now, he is dipping into PHFA's reserve funds and reaching out to individual municipalities and foundations to come up with enough money to get things going. PHFA needs the start-up money to back bonds it would issue to pay for the HERO program.

So why should you care? First of all, if banks and lenders don't get paid back, credit is going to become more expensive. The money supply will be lower. That's basic economics.

Here in Philadelphia, though, it's a much bigger deal. I think we need rescue funds and that the Commonwealth should step up, but there's also some commonsense steps that the lenders themselves could take, and stay in the black in the bargain.

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