This is a new mortgage assistance program that is being funded with $1-billion from the Department of Housing and Urban Development, or HUD. The Emergency Homeowners Loan Program will provide mortgage help and loans to those homeowners who may be facing a foreclosure due to a drop in household income from a job loss, underemployment or reduction in working hours, involuntary unemployment, or a medical condition or emergency. Individuals who meet the programs qualifications can receive interest-free loans for up to $50,000. All proceeds need to be used to address your housing needs, and the loan period will be for up to two years.
The program also works in combination with other federal government mortgage programs, such as the Treasury's Hardest Hit Fund. The main intent is to provide assistance to those families and homeowners in the parts of the country that were hardest hit by the housing crisis. The financial aid can also be focused on those local areas that may not be included in the hardest hit target states, so this program is in fact more extensive.
There are several criteria that need to be met for a homeowner to receive mortgage assistance or a short term loan from the program. They include:
-The applicant needs to be at least three months behind on their monthly mortgage payment. It is important to note that the loan needs to be repaid and the program is not a charity program. So the homeowner must have a “reasonable” likelihood of being able to continue to resume the payment on their home loan and keep up with their monthly mortgage payments and any other related housing expenses within two years from applying for the HUD loan.
-The home involved must be the primary residence. So the applicant needs to have a mortgage on a property that is the main home / principal residence of the borrower. This program is not for people with more than one home. In fact, eligible borrowers may not even own a second home.
-The last condition for receiving help from the HUD Emergency Homeowners Loan Program is that the homeowner must have demonstrated a timely payment record on their mortgage prior to the job loss or medical condition or event that produced the reduction of income for the homeowner. So assistance will not be provided to someone who carelessly missed payments in the past.
If a homeowner applies for help and is accepted, they will be eligible to receive a declining balance, deferred payment bridge loan. This is a loan that will have zero percent interest, non-recourse, and is a so called subordinate loan. The maximum granted to the unemployed and others is $50,000. The funds will be used to to assist eligible borrowers with making payments on their interest, mortgage principal, home insurance, property taxes and home/hazard insurance for a period of up to 24 months.
The loans will be granted at the local level. The program will be administered through a variety of local state and non-profit entities and agencies. One of the main benefits of running the program through local agencies is that many of these organizations can provide other forms of assistance to the unemployed or people who have had a reduction in hours.
For example, many community action agencies and HUD approved counseling agencies also offer free foreclosure counseling, financial assistance for paying other debts and bills, and additional programs that can help the unemployed and those who have had a reduction in income. So a number of resources can be put into play in order to help borrowers.
There are a few different places you can both call for information on the program, as well as to contact to apply. The primary one is CredAbility, which has been selected by the Housing and Urban Development to administer assistance. This is a national, non-profit credit counseling agency. Read more on how to apply for Emergency Homeowners Loan Program.
While you can ask your mortgage servicer about this new federal government program, the best place to turn to for mortgage help from the program are the non-profits and agencies in your local area. Many state governments also provide mortgage programs. Learn more on these options.
HUD also provides other housing programs to low income homeowners. Many of them are offered in partnership with non-profits. The goal is to issue a loan or some other form of assistance in order to ensure the family has a place to live over the short as well as long term. Find resources that offer assistance for housing needs.
You can click here to find a listing of community action agencies, state agencies, and local-non-profits in your county. These agencies will be the best place to go to for further information about the Emergency Homeowners Loan Program.
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