U.S. Government Offers "Free" $50,000 to Troubled Homeowners

by Xin Lu on 1 July 2011 15 comments

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.   

ARTICLE CONTINUES BELOW

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:

Connecticut, Delaware, Idaho, Maryland, Pennsylvania

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?

 

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Guest's picture
Kelsey

I think that some people just depend on others for a handout. If you are house poor, you obviously shouldn't be able to have a house. I understand that it's your house, and you have kids, etc etc but maybe it would be more financially savvy to cut your losses instead of depending on the government to bail you out.

Guest's picture
Guest

THIS IS RIDICULOUS! A website that talks about budgets thinks this kind of spending by the gov't is OK?! Buy a house, default on your loans, and get off scott-free? Boy oh boy are we ever living in The Land of Entitlements! The best part is that when the majority of the people live in this entitlement mindset, there is no longer monetary support and the economy will fall, not just falter. Wow. I'm stunned.

Xin Lu's picture
Xin Lu

Guest, this is more of an informational article for people who might want to apply. If you read my blogs in the past you'll see that I'm pretty against all the bailouts that happened. Regardless of my opinion, it doesn't change the fact that these programs exist and people should know about them if it so happens to help some family.

Guest's picture
Guest

I'm very happy that you're against the Bailouts, everyone who pays taxes should have been/should be. My point is that these programs should NOT exist, and taking advantage of them only perpetuates them. THIS ISN"T FREE. It costs a LOT of money for taxpayers aka the people who downsized accordingly so that they could pay their debts/taxes. I wholeheartedly disagree with these programs.

Xin Lu's picture
Xin Lu

Well, what can you do? The politicians want to look like they're doing something to help "main street" so they make programs like these. It is an election year coming up.

Guest's picture
Anne

A friend of mine has owned her house for over 25 years and the down economy has her at a loss for work in the last year and half. She did not buy a house she couldn't afford nor made bad decisions on money or had a balloon payment. She does not have unrealistic mortgage. She just needs help to ride out this spell and get back on her feet. People like her is likely what this program is intended for. I guess right away people think of the house owners that got their house in a time when loans were given out to people unlikely to qualify for loans otherwise. Too bad.

Guest's picture
Guest

Listen, I understand completely that people fall on hard times--I was one of those people last year, who went through a very tough time, but my husband and I buckled down, pulled back spending in a very serious way, and got through it, without the help of the gov't.
For me, it's a moral thing--I don't believe the US gov't should be shelling out money to people who are defaulting on their homes. That is why the USA is in such financial dire straights. It's not working, and these programs need to be shut down. $1 Billion for these programs? No wonder this country's $14 Trillion in debt!!!!! That's my point. It's unfair for those, like my husband and I, who made hard choices and saw ourselves through a very bad financial spot, and came out on the other side better than before.

Guest's picture
Jerry

These are the kinds of programs that, over time, bankrupt nations. Simply take a look at Greece and the craziness that overwhelming government entitlements lead to... there is no insurance that we will not find ourselves in a similar boat (and without Germany to bail us out) if we don't wise up. Wow.
Jerry

Guest's picture
Guest

I couldn't agree with you more, Jerry. Well said!!

Guest's picture
Josh

Where is my $50,000 to keep renting since I was smart enough not to buy a house I couldn't afford?

Xin Lu's picture
Xin Lu

yeah I'm kind of annoyed that there isn't an equivalent program for renters because a lot of renters also lost their jobs and need help paying their rent. I don't think the government should make it look like that those who have a mortgage are somehow more valuable and worth helping.

Guest's picture
Guest

I'm glad the govt is looking out for us, but I feel that its a slap to those who chose a house within their means. I bought at the height of the bubble and then my job required me to move so now I'm renting at a loss; but because I bought within my means I'm able to make the payments.

Guest's picture
Justine

While I don't think this is a good idea (I know several people that applied for HAMP and it was a disaster) something has to be done to help people losing their homes. In the area I live there is 13% unemployment. The majority of people work in fields heavily hit by the recession (construction, service industry) which show no sign of bouncing back anytime soon. I know couples that have worked full time since they were 16 years old, paid their mortgage on time for 10 years, then both spouses lost their jobs. Retraining for a new job takes time. Its not hard to eat through savings when neither can find a job for 8 months. And what if the average rent in your area is more than your mortgage?

I apologize for the rant, but frankly I get sick of hearing people talk about if someone falls on hard times, that they are very obviously a bum that deserves to rot in the gutter because they didn't have the good sense to know they weren't good enough to have anything.

Guest's picture
Guest

nothing for California I see :(

Guest's picture
Guest

what about those of us that are current on our mortgages, what kind of money is the gov't giving us?