More Funds to Go To Homeowners in Trouble
On Wednesday, the Obama Administration announced that it will provide another $3 billion in aid for unemployed homeowners in 17 states and Washington, D.C. who are struggling to keep up with mortgage payments.
The money, which is coming from a combination of TARP bailout money and a new program led by the Department of Housing and Urban Development, is going to states with that have unemployment rates higher than the national average. HUD.gov released this list of states getting the money and background on how the programs will work.
While the focus is on helping these struggling homeowners stay current on their payments, rather than on restructuring their loans, this program amounts to another foreclosure prevention program lopped atop the Home Affordable Modification Program (HAMP), unveiled with much fanfare by the Administration last year.
HUD Emergency Homeowners Loan Program
This new program will complement Treasury’s Hardest Hit Fund by providing assistance to homeowners in hard hit local areas that may not be included in the hardest hit target states. Those areas are still being determined.
The program will work through a variety of state and non-profit entities and will offer a declining balance, deferred payment “bridge loan” (zero percent interest, non-recourse, subordinate loan) for up to $50,000 to assist eligible borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes and hazard insurance for up to 24 months.
Under the program, eligible borrowers must:
1. Be at least three months delinquent in their payments and have a reasonable likelihood of being able to resume repayment of their mortgage payments and related housing expenses within two years;
2. Have a mortgage property that is the principal residence of the borrower, and eligible borrowers may not own a second home;
3. Demonstrate a good payment record prior to the event that produced the reduction of income.
HUD will announce additional details, including the targeted communities and other program specifics when the program is officially launched in the coming weeks.
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