Emergency Homeowner Loan Program for Residents of 32 States

Published by nora | Filed under Communities, Market Trends, Miscellaneous, Mortgage / Finance, Real Estate

If you’re a distressed homeowner living in the 32 states that did not receive any money from the Hardest Hit Fund established in February, then you might qualify for the Emergency Homeowner Loan Program just launched by the U.S. Housing and Urban Development Department. This program has been funded with $1 billion, to be shared by 32 states and Puerto Rico.

Among the 32 states, the 10 states with the biggest allocations are:

1. Texas   $135,418,959
2. New York   $111,649,112
3. Pennsylvania   $105,804,905
4. Massachusetts   $61,036,001
5. Washington   $56,272,599
6. Minnesota   $55,848,137
7. Wisconsin   $51,540,638
8. Missouri   $49,001,729
9. Virginia   $46,627,889
10. Colorado   $41,286,747

What’s the Emergency Homeowner Loan Program?

Under this program, you can borrow a bridge loan of up to $50,000 so you can pay your mortgage arrears, your unpaid real estate taxes, your insurance premiums, and your mortgage payments during the time you’re having difficulties in paying your mortgage. The program can carry you through your mortgage payments for up to 24 months as you look for ways to stabilize your income.

The bridge loan will be a five-year zero-interest declining balance non-recourse loan and will be a junior lien on your property. This junior mortgage will be processed and recorded following the last monthly payment made by the HUD to your lender. A big plus of this loan is its declining balance feature, which will essentially turn this loan into a grant if you fulfill your end of the agreement during the five-year term. This loan will be extinguished after five years if you live in your property and you religiously make the monthly mortgage payments.

Who Qualifies?

You qualify under this EHLP if:

• Your current gross household income has dropped by at least 15 percent from your previous income.
• Your previous household income is equal to or less than 120 percent of your area’s median income.
• You’re a salaried employee, a wage worker or self-employed.
• Your home mortgage is in default by at least three months and you’ve received a notice of default and a foreclosure warning.
• Your previous income records show that you have the ability to regain full employment and resume your mortgage payments and pay your other debts within two years.
• You’re living in your mortgaged home, which should be a single-family unit, a condo unit or a one- to four-unit structure.

When Does the Assistance End?

The end of HUD assistance occurs when you:

• Reach the maximum loan amount, which is $50,000
• Fail to report changes in your income or employment status
• Regain 85 percent or more of your previous income
• Move out of your mortgaged home
• Sell your mortgaged home
• Refinance your mortgage loan
• Default on your share of the monthly mortgage loan payments

When Can You Start Applying?

The HUD hopes to work out all details with state housing agencies and the national nonprofit NeighborWorks America by the end of this year so you can start applying. Meanwhile, continue getting updates from HUD counselors, your community workers and the HUD website.