U.S. Government Offers "Free" $50,000 to Troubled Homeowners
A new program called the Emergency Homeowner Loan Program is offering a small group of struggling homeowners up to $50,000, and the money does not have to be repaid if the homeowners meet certain requirements.
This program has a funding of $1 billion and is being offered by the Department of Housing and Urban Development and the nonprofit housing advocacy group NeighborWorks America. Applicants apply for an interest-free loan from these groups, and the money goes directly to the lenders for a part of the borrower's mortgage and fees. This assistance runs up to two years or $50,000, whichever occurs first. After the two year period, 20% of the loan will be forgiven for each year that the borrower is current on his or her mortgage. Basically, the loan would be completely forgiven after five years.
The U.S. government is doing this because the Home Affordable Modification Program is winding down and that program has not helped as many people as it hoped to. The purpose is to keep people who have temporarily lost their jobs from losing their homes, and then hopefully these folks can find another job and start paying their mortgages again. However, this program isn't expected to make any significant impact on home prices since it will only help a small group of homeowners.
This is an amazing deal for those who qualify for the program since it is essentially "free" money if you comply with the terms of the program. To qualify, applicants must have lost income due to involuntary hardship and at risk of foreclosure. There is also an income limit to receiving this assistance and you can find the income limits of your county here at the EHLP Area Median Income Limits site. You also have to use the home in danger of foreclosure as a primary residence. This program is currently available in the following states and territories:
Alaska, Arkansas, Colorado, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Oklahoma, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and Puerto Rico.
To apply, you need to go to the NeighborWorks website and fill out a Pre-Applicant Screening Document. They are accepting pre-applications until July 22, 2011, and the final applicants will actually be selected by lottery since there are only about 30,000 applicants that will receive the assistance.
If you don't live in one of the states or territories participating in this program, then there are actually similar programs in all the other states. Connecticut, Delaware, Idaho, Maryland, and Pennsylvania have their own EHLP equivalent programs and you can apply for them in the links below:
Here in California there is a program that gives struggling homeowners up to $3,000 a month in mortgage payments under the Hardest Hit Housing Market Program. You can find the program links for states in the Hardest Hit Housing Market Program below:
Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Washington DC
Essentially the government is handing out free money, but you have to apply quickly and hope you get lucky. Personally I think that this will help people who have a home they can afford and just need a little time to get their income back up again, but for those who have a mortgage that they could not afford in any circumstance then this assistance is just kicking the can down the road.
What do you think? Would this program help you out?