The Obama Administration today announced more targeted support for homeowners struggling with unemployment who are at risk of losing their homes.
The $1 billion initiative, known as the “HUD Emergency Homeowners Loan Program,” aims to provide 24-month bridge loans to those unable to keep up with monthly mortgage payments.
The loans are zero percent interest, non-recourse, subordinate loans (second mortgages), up to $50,000.
Eligible borrowers include those who are at least three months delinquent, but have a “reasonable likelihood of being able to resume repayment of their mortgage payments and related housing expenses within two years.”
The mortgage must be tied to the borrower’s primary residence, and they cannot own a second home.
Additionally, they must be able to demonstrate a good payment record prior to the event that produced the reduction in income.
“We remain committed to helping struggling homeowners, and this program will provide additional assistance to states hit hardest by unemployment,” said Assistant Secretary for Financial Stability Herb Allison, in the release.
“This is part of the Administration’s comprehensive housing policy that has helped to stabilize a fragile housing market and allows responsible homeowners the chance to reduce their monthly mortgage payments to affordable levels.”
The new program will complement the Treasury’s Hardest Hit Fund, which will provide an additional $2 billion in assistance to 17 states and the District of Columbia.