Business

Foreclosure fixes come up short

The Obama administration has unveiled two more aid programs for troubled homeowners facing foreclosure.

In one program, the mortgage servicers whose abuse of struggling homeowners is well-documented in hundreds of court cases will soon be rewarded with a $1 billion paycheck, courtesy of the Emergency Homeowners’ Loan Program (EHLP).

This payday comes as the Obama administration and Congress undertake their latest effort to assist struggling homeowners without actually reforming the faulty system of mortgage servicing.

Asked why the government is doling out money to servicers, rather than focusing on alternative means of aiding homeowners — such as principal writedowns — Adolfo Carrion, regional administrator for the Department of Housing and Urban Development, which is administering EHLP, said, “There’s only so much we can do to force or encourage players in the market to take on costs that they refuse to take on.”

EHLP will allocate $1 billion to New York and 26 states and Puerto Rico. It helps homeowners who’ve been undone by job loss or illness make their mortgage payments.

“It is very favorable to servicers,” said Mike Konczal, a research fellow at the Roosevelt Institute. “Things that try to grease the wheels of this broken machine are not going to solve this problem.”

Even fans of EHLP gripe that it should have launched last year, but delays have created unrealistically tight deadlines. Homeowners must apply for the screening process by July 22, and all the funds must be allocated by September 30, the end of the government’s fiscal year.

On Thursday, the White House announced the extension of mortgage forbearance for unemployed homeowners to one year from three or four months.

New York State will receive just over $111 million of the EHLP funds, and help an estimated 2,700 local families, a tiny fraction of households in foreclosure or serious delinquency.

Desperate New Yorkers like Laura Mastrangelo are hoping EHLP will provide a longed-for lifeline. Mastrangelo, 50, has been out of work since December 2009, and unable to pay the mortgage on her modest two-bedroom Staten Island bungalow since February 2010. Mastrangelo turned in an application for EHLP last week.

“It took me 47 years to get this home, and I would do anything to keep it,” she told The Post.

Under EHLP, if a homeowner continues living in the home and stays current on mortgage payments for five years, then the interest-free loan will be forgiven.