Additional Funds Forthcoming for Targeted Foreclosure-Prevention
Approximately 1.4 million mortgages are in serious delinquency and another 1.5 million homeowners are already in foreclosure.
In a press release issued by the Department of Housing and Urban Development on August 11th, the Obama administration announced $3 billion in additional funds forthcoming for targeted foreclosure-prevention.
Through the Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets, established last February, the Treasury Department will make additional assistance of $2 billion available for homeowners struggling to make their mortgage payments due to unemployment.
Along with the Hardest Hit Fund initiative, the Department of Housing and Urban Development (HUD) will establish a new $1 billion Emergency Homeowners Loan Program that will provide up to 24 months of assistance for struggling homeowners at risk of losing their homes, due to involuntary unemployment, underemployment or a medical condition.
“We remain committed to helping struggling homeowners, and this program will provide additional assistance to states hit hardest by unemployment,” said Herb Allison, Treasury’s Assistant Secretary for Financial Stability, regarding the new money for the Hardest Hit Fund.
The HUD’s new Emergency Homeowners Loan Program 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.
“The program will work through a variety of state and non-profit entities and will offer a declining balance, deferred payment “bridge loan” (zero percent interest, non-recourse, 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”
In order to qualify for HUD’s new Emergency Homeowner Loan Program, borrowers must be at least three months behind on their mortgage payments and show a reasonable likelihood of being able to resume repayment of their mortgage and other related housing expenses within two years. The mortgage property at risk must be the homeowner’s principal residence and they can not own a second home and borrowers must have a good payment history prior to reduction or loss of income.
Additional details about the new Emergency Homeowner Loan Program, including the targeted communities and other program specifics, will be announced by HUD in the next couple of weeks.
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