HUD helps American homeowners with mortgage problems through $1 billion emergency loan fund
Washington, D.C., United States (AHN) – The U.S. Department of Housing and Urban Development has made available a $1-billion lifeline to American homeowners who have problems with their mortgage payments.
The fund, launched in June, is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Its aim is to help homeowners who face foreclosure because they lost their jobs, suffered income reduction, had an economic reversal or a medical condition which make it difficult for them to pay their monthly dues.
The emergency interest-free loan covers a portion of their monthly mortgage up to 24 months or a maximum of $50,000.
According to HUD Secretary Shaun Donovan, the emergency loan program covers 27 states and Puerto Rico. He estimated the program would assist about 30,000 distressed borrowers through an average loan of $35,000.
If recipients of the loan stay in their homes and be current on their payments, the interest-free loan would be written off.
The 30,000 homeowners expected to be helped by the program, however, is only a fraction of the estimated 1.8 million homeowners battling foreclosure. With the HUD expected to be deluged with applications, the department would likely spend the entire fund by the end of Washington’s fiscal year on Sept. 30.
Applicants have until July 22 to submit complete applications. If there are more applicants than what the fund could accommodate, the HUD would use a lottery system to determine beneficiaries of the loan.
There are five additional states that have slightly different rules because they started accepting emergency loan applications earlier under similar programs run by the states. One of them, Maryland, committed $4.2 million to 121 troubled homeowners. Aside from that amount, the state was allocated another $40 million by the HUD.
Another state is Virginia, which has a separate fund aimed to assist 1,223 homeowners. Virginia got another $46.6 million from HUD.
The $1-billion fund complements the Hardest Hit Fund, which made available a larger $7.6-billion fund to troubled homeowners in 18 states and the District of Columbia – which are considered the states hardest hit by the housing crisis.
View full post on All Stories
