For the nearly 4 million homeowners who have fallen behind on their mortgage payments, the federal government is offering a new remedy: free money to catch up on their loans.
The Emergency Homeowners Loan Program is the latest in the federal government's efforts to slow down the flood of foreclosures a necessary step to a full recovery in the housing market, says a Department of Housing and Urban Development official. For people who have lost their jobs, the $1 billion program offers loans of up to $50,000 that don't actually need to be repaid, if applicants meet certain requirements.
Rolled out by HUD and the nonprofit housing advocacy group NeighborWorks America, the program is making loans with far better terms than anything on offer at a local bank. The loans are interest-free. Payments go directly to the lender for a portion of the borrower's monthly mortgage, including missed payments or past due charges. And when the assistance period, which runs for up to two years, ends, 20% of the loan is forgiven with each passing year. In other words, for qualified borrowers who stay in their home for at least five years after the assistance period and who don't fall behind on their mortgage again, this money doesn't have to be paid back.
The program started last week and will take applications through July 22. To be eligible, homeowners must have lost income and be at risk of foreclosure due to involuntary job loss, underemployment or a medical or other economic condition; details on the application process are available online through NeighborWorks America.
Andre Plessis, REALTOR Los Angeles, CA
http://www.wealthcreationteam.net/
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