Homeowners at risk of foreclosure in 32 states can get emergency financial aid from the federal government, but they have to act fast. Deadlines are tight, and homeowners are already flooding the program with inquiries.
Within days of the program’s announcement last week, roughly 600 people had contacted CredAbility, a credit counseling agency in Atlanta, to ask for details, a spokesman says. CredAbility is one of 22 agencies chosen to administer the program by the federal government and NeighborWorks America, a nonprofit housing organization.
As part of the Dodd-Frank Act, Congress set aside $1 billion to help struggling homeowners.
If they qualify, homeowners can get interest-free loans to pay a portion of their monthly mortgage, as well as back payments and legal fees, for up to $50,000 or two years, whichever comes first. The loans do not have to be repaid, as long as the homeowner continues making mortgage payments on time for five years. The program is expected to help from 20,000 to 30,000 distressed homeowners.
The program, known as the Emergency Homeowners’ Loan Program, is available to homeowners ineligible for the larger, $7.6 billion “hardest hit” fund, which provided assistance to 18 states that absorbed the worst of the housing crisis.
There are some hoops to jump through though. To qualify, homeowners must be at least three months delinquent on their home loans and have suffered at least a 15 percent income reduction from a job loss due to economic or medical reasons. Other requirements, like income limits, also apply.
To make sure the emergency funds are used up by Sept. 30, the end of the federal fiscal year, there are tight deadlines to meet. Homeowners must submit preliminary applications for the funds by July 22, less than four weeks away. The counseling agencies will screen the applications and submit the names of eligible homeowners to NeigborWorks for review. Because demand is expected to outstrip available funding, finalists likely will be selected by lottery.
Read the full article at the New York Times
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