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.
It can be used to make payments to mortgage principal, interest, mortgage insurance, property taxes and hazard insurance for up to 24 months.
Are You Eligible for the HUD Emergency Homeowners Loan Program?
- Must be 3+ months behind on mortgage payments
- Have reasonable likelihood of being able to resume payments within 2 years
- Must be principal residence of the borrower, and borrower may not own a second home
- Demonstrated good payment history prior to event that produced income loss
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.”
In other words, they aren’t going to help you if there’s no chance you’ll be able to get back on track. So it only works as temporary relief.
Secondly, the mortgage loan must be tied to the borrower’s primary residence, and they cannot own a second home. This is to avoid providing assistance to investors and other well-to-do borrowers looking to take advantage of the system.
Additionally, homeowners must be able to demonstrate a good payment record prior to the event that produced the reduction in income.
So if you recently lost your job, and then started missing monthly mortgage payments as a result, that would make sense. If you were missing housing payments before a negative event took place, you might be out of luck here.
“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 press 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.
The HUD Emergency Homeowners Loan Program will be offered via a variety of state and non-profit entities