Government Foreclosure Help Dwindles

The Emergency Homeowners Loan Program (EHLP), a government-funded program that assists homeowners faced with foreclosure with loan assistance, has ended. Some organizations that assist in facilitating the loans …

The Emergency Homeowners Loan Program (EHLP), a government-funded program that assists homeowners faced with foreclosure with loan assistance, has ended. Some organizations that assist in facilitating the loans have been granted an extension until July 27; however, the drawdown is seen as a blow to an already weakened housing market. The EHLP was launched using a $1 billion fund, and Housing and Urban Development estimates 30,000 homeowners have been helped. Meanwhile the government’s companion program, the Home Affordable Modification Program, is not seeing much success and policy wonks point the finger at banks that do not encourage homeowners to apply for the program. For more on this continue reading the following article from The Street.

One lifeline for homeowners facing foreclosure ended Friday as wider government efforts to control the housing crisis continue to fall short.

The deadline to qualify for the Emergency Homeowners Loan Program closed on Friday.

Applications will be accepted until end of business hours, although online applications can be made until midnight.

Some organizations have been granted an extension. The Homeownership Preservation Foundation, which operates the national Homeowners HOPE Hotline, has been granted an extension and will take applications until July 27th.

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Colleen Hernandez, HPF’s CEO urged homeowners to apply for the program."It is important to note that the loan is forgiven if the homeowner stays in the home for five years- there would be no additional debt burden, no requirement to pay the money."

The Department of Housing and Urban Development (HUD) — in conjunction with privately run NeighborWorks America — launched the $1 billion EHLP in June to assist unemployed and underemployed homeowners at risk of losing their homes to foreclosure in 27 states in the U.S. and in Puerto Rico.

Eligible homeowners whose incomes declined by 15% or more as a result of "involuntary unemployment or underemployment" due to economic conditions, will qualify for interest-free loans, which pay a portion of their monthly mortgage for up to two years or up to $50,000 whichever comes first. Homeowners should be delinquent on mortgage payments for at least three months, among other criteria.

The program is expected to help 30,000 distressed borrowers with an average loan of $35,000, according to HUD.

The end of the EHLP program comes as the U.S. government continues to struggle to find success with its Home Affordable Modification Program (HAMP), which was created in 2009 as a way to allow for banks and borrowers to extend the life of existing loans.

Last month the U.S. Treasury Department criticized the largest mortgage servicers, including Bank of America(BAC), JPMorgan Chase(JPM) and Wells Fargo(WFC), for not pushing for more consumers into the HAMP program.

"While we continue to get tens of thousands of new homeowners into mortgage modifications each month, we need servicers to step up their performance to meet the needs of those still struggling," said acting Treasury Assistant Secretary for Financial Stability Tim Massad in a statement.

This article was republished with permission from The Street.

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