(a) If the agency determines that a mortgagor is eligible for assistance under this article, the agency shall pay directly to each mortgagee secured by the mortgagor's real estate payments on behalf of the mortgagor. The agency shall pay to each mortgagee the full amount then due to that mortgagee pursuant to the terms of the mortgage without regard to any acceleration under the mortgage, or the full amount of any alternate mortgage payments agreed to by the mortgagee and mortgagor. This amount shall include, but not be limited to, the amount of principal, interest, taxes, assessments, ground rents, hazard insurance, any mortgage insurance or credit insurance premiums. The initial payment made by the agency to each mortgagee shall be an amount which makes each mortgage current and pays reasonable costs and reasonable attorneys' fees already incurred by such mortgagee. However, in no event shall the total payment exceed the sum equal to twenty-four (24) consecutive or nonconsecutive months of arrears on any residential mortgage.

(a.1) A mortgagee entitled to payments under this section shall provide to the agency within thirty (30) days of the agency's request the following documents and information:

(a.2) Failure to provide in a timely fashion the documents and information required under subsection (a.1) will result in the mortgagee's forfeiture of the right to receive any late fees and attorney fees, costs and expenses.

(a.3) Upon the agency's payment of the initial payment to the mortgagee, including all corporate advances allowed by the agency, the mortgagee shall adjust its accounts to reflect that the mortgage obligation is, as of the date of receipt of such funds, reinstated and current for all purposes. The subsequent imposition by a mortgagee of any charges, fees or other amounts that were paid or disallowed by the agency, or waived by the mortgagee, shall be in violation of the act of December 17, 1968 (P.L. 1224, No. 387),¹ known as the “Unfair Trade Practices and Consumer Protection Law.”

(b) After the agency has paid any and all arrearages pursuant to subsection (a) to each mortgagee, the mortgagor may be entitled to monthly mortgage assistance payments pursuant to this article. A mortgagor on whose behalf the agency is making mortgage assistance payments shall pay monthly payments to the agency. Such payments shall be in an amount which will cause the mortgagor's total housing expense not to exceed forty (40) percent of the mortgagor's net effective income. This shall be the maximum amount the mortgagor can be required to pay during the period a mortgagor is eligible for emergency mortgage assistance: Provided, however, That beginning February 1, 1999, and continuing thereafter, any mortgagor approved for continuing monthly mortgage assistance or whose continuing mortgage assistance is approved after being recertified by the agency shall pay to the agency a minimum monthly payment of at least twenty-five ($25) dollars for each mortgage being assisted. The mortgagor shall make the above payment to the agency at least fifteen (15) days before each mortgage payment is due to each mortgagee. Upon receipt of this payment from the mortgagor, the agency or its duly authorized agent shall send the total mortgage payment directly to each mortgagee. “Housing expense” shall be defined as the sum of the mortgagor's monthly utility, hazard insurance expense, real estate taxes and required mortgage payments, including escrows. “Net effective income” shall be defined as gross household income less city, State and Federal income and social security taxes. “Gross household income” means the total income of the applicant, all other owner-occupants of the residence, any spouse and children residing in the same household as the applicant and any other resident of the household declared by the mortgagor as a dependent for Federal tax purposes. The income of other unrelated individuals residing in the household shall be considered part of gross household income to the extent that their income is made available in support of the household. If the mortgagor is receiving emergency mortgage assistance under a program other than that established in this article, the amount of the payment he or she is required to make to the agency under this article shall take into consideration the amount of assistance he is receiving under such other programs.

(b.1) In lieu of paying arrearages under subsection (a) or ongoing assistance under subsection (b), the agency may fund a compromise pay-off of the balance of the mortgage, if the agency determines that structuring assistance in such a manner would be in the best interest of the agency and the mortgagor, as agreed to by the mortgagee.

(c) The amount by which the mortgagor assistance payments made by the agency to all mortgagees exceeds the amount of payments made by the mortgagor to the agency shall be a loan in that amount by the agency to the mortgagor. Such loan shall be evidenced by such documents as the agency shall determine and shall be subject to repayment with interest and secured as provided herein.

(d) If the mortgagor fails to pay to the agency any amounts due directly from him or her under this section within fifteen (15) days of the due date, the agency shall review the mortgagor's financial circumstances as provided in subsection (b) to determine whether the delinquency is the result of a change in the mortgagor's financial circumstance. If the delinquency is not the result of a change in the mortgagor's financial circumstances, the agency shall terminate the emergency mortgage assistance payments and any mortgagee may, at any time thereafter, take any legal action to enforce its mortgage without any further restriction or requirement under this article. If the delinquency is the result of a change in the mortgagor's financial circumstances, the agency shall modify the mortgagor's required payments to the agency as the agency shall determine.

(e) If any mortgagee scheduled to receive monthly payments from the agency pursuant to this article fails to receive from the agency the full amount of such monthly payment within thirty (30) days of the scheduled due date, or if a mortgagor fails to observe and perform all the terms, covenants and conditions of the mortgage, that mortgagee may, at any time thereafter, take any legal action to enforce the mortgage without any further restriction or requirement under this article.

(f) Payments under this article shall be provided for a period not to exceed twenty-four (24) months, either consecutively or nonconsecutively, whether such payments are on account of arrears, continuing monthly assistance or any combination thereof, and shall not exceed the sum of sixty thousand ($60,000) dollars on behalf of any mortgagor. The agency shall establish procedures for periodic review of the mortgagor's financial circumstances for the purpose of determining the necessity for continuation, termination or adjustment of the amount of the payments. Payments shall be discontinued when the agency determines that, because of the changes in the mortgagor's financial circumstances, the payments are no longer necessary in accordance with the standards set forth in section 404-C.²

(f.1) The twenty-four (24) month limit on assistance available under this act established in subsection (f) and referenced in sections 401-C(a)(5), 403-C(f) and 404-C(a)(5) and (12)³ shall increase to thirty-six (36) months if during the month the homeowner submits an application for assistance the average rate of total unemployment in the Commonwealth, as seasonally adjusted, for the period consisting of the most recent three (3) months for which such data for the Commonwealth is published before the close of such month equals or exceeds six and one-half (6.5) percent.

(f.2) Every five (5) years, beginning in the year 2003, the General Assembly shall review the limit on the total assistance available under this act established in subsection (f) and the minimum monthly payment established in subsection (b). The General Assembly may increase either or both upon a showing that increases in housing costs require higher loan amounts in order for the act to be beneficial to homeowners in all regions of the Commonwealth.

(g) Repayment of amounts owed to the agency from a mortgagor shall be secured by a mortgage lien on the property and by such other obligation as the agency may require. The priority of any lien obtained by the agency under this article shall be determined in the same manner as the lien of a general secured creditor of the mortgagor. The lien or other security interest of the agency shall not be deemed to take priority over any other secured lien or secured interest in effect against the mortgagor's property on the date assistance payments begin. The agency may allow subordination of the mortgage assistance lien if such subordination is necessary to permit the mortgagor to obtain a home improvement loan for repairs necessary to preserve the property.

(h) In cases of joint mortgagors who are husband and wife, where only one spouse who is an occupant of the mortgaged premises makes application for and receives assistance under this article, the lien to secure repayment as aforesaid shall be a lien on the property of like force and effect as a mechanic's lien.