HUD announces program monies for homeowners

U.S.

Department of Housing and Urban Development (HUD) Regional Administrator C.

Donald Babers announced today that HUD will provide $135,418,959 to help

struggling homeowners in Texas through its Emergency Homeowners Loan Program

(EHLP). The Dodd-Frank Wall Street

Reform and Consumer Protection Act, signed into law by President Obama in July,

authorizes HUD to administer a $1 billion Emergency Homeowners Loan Program, to

provide assistance – for up to 24 months – to homeowners who have experienced a

substantial reduction in income due to involuntary unemployment,

underemployment, or a medical condition and are at-risk of foreclosure. HUD will assist borrowers in 32 states and Puerto Rico not

otherwise funded by Treasury’s Hardest Hit Housing Fund program, based on the

state’s relative share of unemployed homeowners. It is HUD’s intention for the

program to begin taking applications from eligible homeowners by the end of the

year.

“The Emergency Homeowner Loan

Program will provide limited and targeted assistance to help working families

get back on their feet and keep their home while they look for work,” said Mr.

Babers. “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. Together these two initiatives represent a combined $8.6 billion

investment to help struggling borrowers and in doing so further contribute to

the Obama Administration’s efforts to stabilize housing markets and communities

across the country.”

Who Will Be Helped

The program will complement

existing Administration efforts to assist struggling homeowners –

including the Home Affordable Modification and Hardest Hit Fund initiative

administered by the U.S. Treasury Department. Under the EHLP:

1) the borrower must be at least three months delinquent

in their payments and have a reasonable likelihood of being able to resume

repayment of their mortgage payments and related housing expenses within two

years.

2) the property must be the principle residence of the

borrower, and eligible borrowers may not own a second home

3) the borrower must have suffered at least a 15 percent

reduction in income and have been able to afford their mortgage payments prior

to the event that triggered the loss income.

How They

Will Be Helped

The HUD Emergency Homeowners

Loan Program will offer a forgivable, deferred payment “bridge loan” (zero

percent interest, non-recourse, subordinate loans) for up to $50,000 to assist

eligible borrowers with their mortgage arrearages and payments on their for

mortgage principal, interest, mortgage insurance premiums, taxes and hazard

insurance for up to 24 months.

There will be a

dual delivery approach for program administration. The first approach will

delegate some of the program’s administrative functions to a designated third

party. The second approach will enable state housing finance agencies (HFAs)

that operate substantially similar programs to engage in relief efforts on

behalf of residents of their state:

o

Delegated

approach:

HUD will delegate key program administration functions to NeighborWorks®

America – an experienced and highly regarded national network of affiliated

housing counseling agencies. Under the program, nonprofit housing

counselors who are part of the National Foreclosure Mitigation Counseling

Program administered by NeighborWorks® America will coordinate intake

counseling, document preparation and outreach functions. HUD will also

use its delegation authority to contract with an experienced entity to provide

loan servicing and fiscal control functions such as collecting payments from

homeowners, distributing payments to servicers, and managing loan

balances.

o

Substantially similar state law

approach: State HFAs that operate

loan assistance programs that are determined by HUD to be substantially similar

to the EHLP will receive allocations to fund emergency loans for borrowers in

their states as well as payments to cover the administrative costs of

performing the intake and housing counseling and fiscal agent functions

(described above) directly or indirectly through subcontracts with third parties.

information about HUD and its programs is available on the Internet at www.hud.govlinkand espanol.hud.govem>.