Hundreds of millions of dollars in federal government aid is flowing to North Carolina as part of the Hardest Hit Fund. The money will be used to help homeowners across the state who have had a reduction in their income and can no longer keep current with their mortgage payments. The federal government funded mortgage assistance program will help people who have lost their jobs, had a reduction in income from reduced hours at work, or who are facing an unexpected crisis such as a medical emergency. The North Carolina Housing Finance Agency will be adminstering the Hardest Hit Fund in the state.
There will be three main components and sources of financial aid offered to homeowners. They include the following:
Mortgage Payment Program (MPP) - This component of the program will provide homeowners with a 0% interest loan that is non-recourse, deferred-payment, and a so called subordinate loan. The amount of the loan will be forgiven after 10 years.
The loan will be used to pay the homeowners monthly mortgage and other housing and mortgage-related expenses, such as homeowner insurance, property taxes, and condo and homeowner dues. The loan is intended to “buy” time while the homeowner seeks new employment or trains for a new job.
In addition funds from the MPP payment can also be used to help pay for past-due mortgage payments (arrearages). There are some limits to the amount of the loan provided. For example, homeowners in the hardest hit counties in North Carolina will be eligible to receive a loan of up to $36,000, and it will not exceed 36 months of assistance. If you live in a part of the state that has not been as impacted by the weak economy, homeowners in those areas will be eligible for up $24,000, and they will not be able to exceed 24 months of assistance.
Loan Modification - This is another part of the program. It is a so called Permanent Loan Modification Program (PLMP). The PLMP program will provide homeowners with a streamlined method for altering or modifying their existing home loans. The aid will be available for those homeowners whose mortgages have become unsustainable as a result of a job loss, reduction in income or some other program-eligible hardship.
The mortgage modification will provide the NC homeowner with a 0% interest loan. But the help doesn’t stop there. In addition, the hardest hit program will provide the homeowner with a principal reduction with the added option of an interest rate decrease. Another solution may in fact involve a term extension by the bank or lender to achieve a monthly payment not exceeding 31% of the homeowner’s gross monthly income.
Second Mortgage Refinance Program (SMRP) - The North Carolina Hardest Hit Fund will also provide a loan to pay a second mortgage. This will also be offered as a 0% interest, deferred-payment, non-recourse, and a subordinate loan that will be forgiven after 10 years. The funds will be used to deal with a second mortgage that a homeowner may have.
The North Carolina Housing Finance Agency will be partnering with many local housing counseling agencies, mortgage services, and other businesses. You can call the agency at 919-877-5700 to learn about the North Carolina Hardest Hit Fund program. If you do not qualify, they may have other solutions or referrals that may be recommended for a homeowner in your situation.
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