The Obama administration has announced two programs providing additional support to homeowners who aren’t paying their mortgages.
States eligible to receive support under the first program have all experienced an unemployment rate at or above the national average over the past 12 months. Each state will be given funds for targeted unemployment programs providing temporary assistance to eligible homeowners to help them pay their mortgage while they seek reemployment or additional employment or undertake job training.
More for Unemployment Programs
States that have already benefited from previously announced assistance under the Hardest Hit Fund may use these additional resources to support the unemployment programs previously approved by the Treasury Department, or they may opt to implement a new unemployment program. The Hardest Hit Fund was created in February 2010 to provide aid to families in states hit hard by the economic and housing market downturn.
States that do not currently have Hardest Hit Fund unemployment programs and want them must submit proposals to the Treasury Department by September 1. The proposals must, within program guidelines, meet the distinct needs of their state.
The states eligible to receive funds through this additional assistance, along with allocations based on their population sizes, are as follows:
New Jersey: $112,200,638
North Carolina: $120,874,221
Rhode Island: $13,570,770
South Carolina: $58,772,347
Washington, DC: $7,726,678
The second new program, the HUD Emergency Homeowners Loan Program, is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which President Obama signed into law in July. It will provide assistance to homeowners in hard-hit local areas that may not be included in the hardest-hit target states. Those areas are still being determined.
State, Nonprofits Involvement
The program will work through a variety of state and nonprofit entities and offer a declining balance, deferred payment “bridge loan” (zero percent interest, nonrecourse, subordinate loan) for up to $50,000 to assist eligible borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes, and hazard insurance for up to 24 months.
Under the program, eligible borrowers must:
(1) be at least three months delinquent in their payments and have a reasonable likelihood of being able to resume mortgage payments and related housing expenses within two years;
(2) have a mortgage property that is the principal residence of the borrower, and not own a second home;
(3) demonstrate a good payment record prior to the event that produced the reduction of income.
HUD will announce additional details, including the targeted communities and other program specifics, when the program is officially launched in the coming weeks.
Robert Wenzel ([email protected]) is editor and publisher of EconomicPolicyJournal.com, where an earlier version of this article appeared. Used with permission.