Emergency Homeowner Loan ProgramBy
Bill Apgar, HUD Senior Advisor for Mortgage Finance said today, “HUD’s new Emergency Homeowner Loan Program will build on Treasury’s Hardest Hit initiative by targeting assistance to struggling unemployed homeowners in other hard hit areas to help them avoid preventable foreclosures.” Apgar continued, “Together, these initiatives represent a combined $3 billion investment that will ultimately impact a broad group of struggling borrowers across the country and in doing so further contribute to the Administration’s efforts to stabilize housing markets and communities across the country.”
Emergency Homeowner Loan Program to Help Refinancing Under-Water Mortgages
The Obama Administration today announced additional support to help homeowners struggling with unemployment through two targeted foreclosure-prevention programs. Through the existing Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets, the U.S. Department of the Treasury will make $2 billion of additional assistance available for FHA programs for homeowners unable to qualify for mortgage refinancing as well as struggling to make their home loan payments due to unemployment.
The Emergency Homeowner Loan Program will offer loan relief and assistance for up to 24 months to homeowners to struggling homeowners who are at risk of foreclosure. This finance relief program is targeting homeowners who have experienced a significant reduction in income due to involuntary unemployment, underemployment, or a medical condition. “We remain committed to helping struggling homeowners, and this program will provide additional assistance to states hit hardest by unemployment,” said Assistant Secretary for Financial Stability Herb Allison. “This is part of the Administration’s comprehensive housing policy that has helped to stabilize a fragile housing market and allows responsible homeowners the chance to reduce their monthly mortgage payments to affordable levels.”
HUD extended the homeowner assistance and the mortgage relief will be in the form of a deferred payment also known as a bridge loan which can be used to help get a mortgage, taxes and insurance payment current. HUD has stated that the Emergency Homeowner Loan can assist struggling borrowers for up to 24 months. The loan relief funds will be provided under the Emergency Homeowners Loan Program and will be set aside for the individual states and Puerto Rico based on each states proportional share of national unemployment measures as applied to homeowners.
Eligibility: To be eligible for the program a household must have had an income, prior to the event which caused the delinquency, equal to or less than 120% of the Area Median Income and a post-event decrease in income of at least 15%. The homeowners must be at least 3 months delinquent on home loan payments on their principal home and have either received a foreclosure notice or be able to self-certify to the likelihood that they will default on their mortgage due to the delinquency.
President Obama first announced the Hardest Hit Fund in February 2010 to allow states hit hard by the economic downturn flexibility in determining how to design and implement programs to meet the local challenges homeowners in their state are facing. Under the additional assistance announced today, states eligible to receive support have all experienced an unemployment rate at or above the national average over the past 12 months. Each state will use the funds for targeted unemployment programs that provide temporary assistance to eligible homeowners to help them pay their mortgage loan while they seek re-employment, additional employment or undertake job training. States that do not currently have Hardest Hit Fund unemployment programs must submit proposals to Treasury by September 1, 2010 that, within established loan guidelines, meet the distinct needs of their state.