Help for Unemployed Homeowners at Risk of Foreclosure, But Time is Tight

Emergency Homeowners' Loan ProgramHomeowners in thirty-two states who have lost their jobs due to economic or medical reasons, and who are at least three months delinquent on their mortgages, may qualify for new federal no-interest loans to help them stay in their homes.  A total of $1 billion is available through HUD's Emergency Homeowner Loan Program (EHLP) in states not covered by the Treasury Department's Hardest Hit Housing Market program -- but preliminary applications must be submitted by July 22.

Qualified homeowners can receive loans for up to $50,000 or two years, whichever comes first, to help pay a portion of their monthly mortgage, as well as payments in arrears and legal fees.  Applications are available through the non-profit NeighborWorks America and then submitted to one of the federally-designated service agencies you can find by state location.

HUD lists the following core features and requirements for the EHLP loan program:

The EHLP is designed to provide mortgage payment relief to eligible homeowners experiencing a drop in income of at least 15% directly resulting from involuntary unemployment or underemployment due to adverse economic conditions and/or a medical emergency. Other EHLP eligibility requirements include:

  • Income Limit: Applicant has a total household income equal to, or less than, the greater of either $75,000 or 120 percent of the Area Median Income (AMI) for a household size of four (4) persons previous to loss of income resulting from involuntary unemployment, underemployment, and/or medical emergency/serious injury.
  • Delinquency: Applicant must be at least three months delinquent on mortgage payments, as signified by notification by their lender/servicer.
  • Likelihood of Foreclosure: Applicant must have received notification of their lender's/servicer's intention to foreclose on their mortgage as a result of the delinquency, and must also certify to the likelihood that their mortgage will be foreclosed upon.
  • Ability to Resume Payment: Applicant can be determined to have a reasonable likelihood of being able to resume repayment of the first mortgage obligations within 2 years, and meet other housing expenses and debt obligations when the household income rises above 85% of the previous level.
  • Principal Residence: Applicant must reside in the mortgaged property as their principal residence, both at time of application and for the duration of the program loan period. The mortgaged property must also be a single family residence (1 to 4 unit structure or condominium unit).

Not all applicants will qualify, and depending on the number of applicants, not all qualifying applicants will necessarily be chosen.  But for those who are selected, 20 percent of the loan repayment is forgiven for each year that the homeowner keeps making mortgage payments on time, for up to 100% of the loan over five years.

The program is available in 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, Wyoming and Puerto Rico.  Five other states have similar federal programs administered through state agencies: Connecticut, Delaware, Idaho, Maryland, and Pennsylvania.

All available funds must be allocated by September 30, 2011.  But the key deadline for qualified homeowners looking to apply is coming up fast:  initial applications must be submitted by July 22.

 

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