HUD's Emergency Program to Assist 30,000 Foreclosure Risk Homeowners

The Department of Housing and Urban Development is once again cooperating with nonprofit credit counseling agencies to ensure its Emergency Homeowners Loan Program comes to the rescue of New York’s distressed homeowners at risk of foreclosure.

Mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, over $1 billion in emergency loans nationwide are expected to assist about 30,000 homeowners in 27 states and Puerto Rico. The program is designed to assist homeowners who have suffered a loss of income due to unemployment, underemployment or a medical issue by offering interest-free loans of up to $50,000 or to receive mortgage assistance for two years. Homeowners who meet certain criteria can apply by July 22.

Qualifying criteria include involuntary unemployment or underemployment caused by adverse economic or health conditions, a minimum 15% reduction in income, or 90 days past due on mortgage payments and risk of foreclosure as of June 1, 2011. Also, besides a letter from their bank, “a reasonable likelihood to resume full monthly mortgage payments” by the end of the second year and income of less than 120% of the area median income, or $75,000, criteria include income evaluations of anyone else on the mortgage note.

Even though one size may not fit all, Michelle Jones, senior vice president of counseling at CredAbility, one of the counseling agencies selected by HUD to assist New York homeowners apply for the program, told this publication there will not be any differences in the amounts received by homeowners chosen for the program based on location.

CredAbility has established a landing page on its website where homeowners can fill out a pre-application to determine if they qualify for EHLP. Only two days after program was first announced 400 people visited the landing page and 73 of those were from New York. Up to 2,633 New York homeowners will be selected to receive help from EHLP.

The zero percent interest loan covers the amount of mortgage payments past due on their primary residence and 100% of the delinquent amount due to cover property taxes, mortgage and hazard insurance premiums, homeowner association fees and foreclosure-related fees. These funds are free grants if the homeowner makes mortgage payments on time for five years.

The program complements the Hardest Hit Funds program, which helps those in states such as California and Florida that have been affected more than others by unemployment and foreclosure, Jones said. “The requirements for homeowners in EHLP are similar, though in some cases, states in the Hardest Hit Funds refined the requirements.” The difference, she said, is that state agencies are running the Hardest Hit Funds programs in those states, while for EHLP, nonprofit credit counseling agencies are conducting the local marketing and taking applications. The EHLP is for 27 states and Puerto Rico and the largest states affected are Texas and New York.

The pre-application contains information to allow a counseling agency to determine if a homeowner meets the program's qualifications. After July 22, all homeowners who meet the qualifications will be entered into a lottery to determine the 22,000 homeowners nationally who will be selected for the program.

Other partners to the program include NeighborWorks America and the National Foundation for Credit Counseling.

NeighborWorks provides program administration functions on behalf of HUD while the National Foundation for Credit Counseling, which received $5.8 million, is HUD’s largest counseling partner for the program.

One of the nation’s largest and oldest nonprofit credit counseling organizations, NFCC is participating through its 22 member agencies that act as EHLP Intermediaries that deliver outreach, screening, application assistance and counseling services.