HUD, NeighborWorks Roll Out Emergency Program for Unemployed
By: Carrie Bay
Lost income from unemployment has left many homeowners unable to make their mortgage payments and pushed them to the brink of default, some into foreclosure.
Housing analysts and economists have become especially vocal about the effect of extended periods of joblessness on mortgage performance. The average duration of unemployment was 40 weeks in May, according to the U.S. Department of Labor.
On Monday, HUD and NeighborWorks America announced the roll-out of the Emergency Homeowners’ Loan Program (EHLP) to 27 states across the country and Puerto Rico.
The program will assist homeowners who have experienced a reduction in income and are at risk of foreclosure due to involuntary unemployment, underemployment, or a medical condition.
Under EHLP program guidelines, eligible homeowners can qualify for an interest free, deferred payment “bridge” loan which pays a portion of their monthly mortgage for up to two years, or up to $50,000, whichever comes first.
Congress provided $1 billion dollars to HUD, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, to implement EHLP. A total of 32 states and Puerto Rico have been slated to receive funds to help unemployed homeowners in their communities.
In April, HUD deployed an initial round of funding, totaling $198 million, to five states that are administering EHLP directly: Connecticut, Delaware, Idaho, Maryland, and Pennsylvania.
The balance awarded under the program — $802 million – is being deployed among the remaining 27 states and Puerto Rico, where EHLP will be administered by NeighborWorks.
The remaining states include: Alaska, Arkansas, Colorado, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Oklahoma, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
EHLP will pay a portion of an approved applicant’s monthly mortgage, including missed payments, past due charges, taxes, insurance, and attorney fees.
There’s a rather short window for the program, so Eileen Fitzgerald, NeighborWorks CEO, is encouraging homeowners to apply now in order to find out if they qualify for this new mortgage assistance program.
Documentation for pre-applicant eligibility screening must be submitted to a participating EHLP agency by July 22, 2011. The homeowner application period will not begin until late July 2011.
HUD says EHLP is expected to aid up to 30,000 distressed borrowers, with an average bridge loan of approximately $35,000.
EHLP is a complement to the Hardest Hit Fund which makes available $7.6 billion to 18 states and the District of Columbia where housing markets have been acutely impacted by unemployment and falling property values. HUD says with Monday’s EHLP launch, mortgage assistance is now available for unemployed and underemployed homeowners in every state.
“Through the Emergency Homeowners’ Loan Program the Obama administration is continuing our strong commitment to help keep families in their homes during tough economic times,” said HUD Secretary Shaun Donovan.
The U.S. House of Representatives voted to pull the plug on EHLP in March, faulting the program as “excessive government spending” at a time when the nation itself has hit its debt ceiling and a fierce tug-of-war is underway in Washington over the federal budget and growing deficit.
The House-approved bill to terminate the program, as well as three others to end federal housing initiatives, never made it out of the House to the Senate. The White House vowed to veto all measures had they made it that far.
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