The Department of Housing and Urban Development has rolled out a new $1 billion program to provide bridge loans of up to $50,000 for struggling mortgagors who have lost their jobs or suffered a significant loss of income.
Delinquent homeowners who have received foreclosure notices may be eligible for the program if they can demonstrate an ability to get a job or increase their income within two years.
The bridge loan will cover missed payments and up to two years of monthly mortgage payments for a maximum of $50,000.
The bridge loans are "forgivable over a five-year period," said HUD spokesman Brian Sullivan. Once the homeowner becomes current, HUD will forgive 20% of the loan for each year the homeowner remains current.
Applicants for the program must apply through local nonprofit housing counseling organizations that are affiliated with NeighborWorks America.
HUD's Emergency Homeowner Loan Program is available in the 32 states and Puerto Rico not covered under the Treasury Department's Hardest Hit Housing Market program.
"In crafting this new loan program, HUD built on the lessons learned from Treasury's Hardest Hit initiative to design and implement a program to assist struggling unemployed homeowners avoid preventable foreclosures," HUD secretary Shaun Donovan said.
"Together these two initiatives represent a combined $8.6 billion investment to help struggling borrowers," he added.
