The Emergency Homeowner Loan Program was signed into law eight months ago, but the $1 billion in aid for unemployed and underemployed people facing foreclosure has just now reached the first few states.
Borrowers could receive as much as $50,000 in interest-free loans to pay off past-due amounts and to make up to two years of payments. They must have taken an income hit of at least 15 percent, be three to 12 months behind on their mortgage and have a "reasonable likelihood" of being able to get back on their feet.
The emergency help is like loan-to-grant money given to first-time homebuyers: No payments are due for five years, and every year the total is reduced by 20 percent until nothing is owed -- as long as the homeowner keeps the property and stays up-to-date on the mortgage during that time.
If you want to apply, you have to meet with a nonprofit housing counselor, the state says. Its approved list is here. You can also connect with a counselor by calling the state's foreclosure-prevention hot line, 877-462-7555. The state is calling its version of the program "Emergency Mortgage Assistance."
Elected officials and housing counselors talked to borrowers about the program at two events over the weekend, one in Baltimore and the other in Prince George's County. Organizers of the Baltimore event, Money Power Day, say a steady stream of homeowners met with foreclosure-prevention counselors to sort through their options.
Why the months-long delay in receiving the federal money, you might ask? (An August press release said the program would be launched "soon.")
Some have speculated that it's politics. Federal foreclosure-prevention programs have come under fire for helping too few people, and Republicans want to put the kibosh not only on the much-maligned HAMP but also on the Emergency Homeowner Loan Program.
Legislation to end the still-untested loan program would need to get through the Democrat-controlled Senate and avoid a presidential veto, however. So I don't know if the U.S. Department of Housing and Urban Development was purposefully dragging its feet to see if the program would survive before doling out the money, or if eight months between authorization and actual funding is just typical gestation for a new program. States had to apply, and HUD decided whether to let local officials administer the program (as is happening in Maryland) or to delegate that work to a third party.
I asked a HUD spokesman on Friday why the money took so long to get to the states. He said he would check, but I didn't get an answer that day.
Philadelphia has been anxiously anticipating the funds -- officials there temporarily stopped foreclosure auctions in January, anticipating the money any day, but recently ordered them restarted rather than head into a fourth straight month without sheriff's sales. But a judge ruled that the sales can't be finalized for 90 days, which gives borrowers a shot at getting the loan.
The Philadelphia Inquirer reports that the national program was modeled off a Pennsylvania effort that helped more than 45,000 homeowners avoid foreclosure since the early 1980s. Loan repayments there have exceeded state aid.
What do you think? Better or worse than loan modifications?
U.S. Rep. Spencer Bachus, a Republican from Alabama, is among those in the thumbs-down group.
"When the taxpayers pay a $50,000 check, who do you think it goes to?" Bachus said, according to a HousingWire story. "It goes to Bank of America. It goes to JPMorgan Chase. It goes to Citigroup. This billion dollars is not going to homeowners. It's going to the largest institutions."
