Passage of FinReg Means $1 Billion for Unemployed Homeowners
The Dodd-Frank financial regulatory reform bill — passed out of Congress yesterday and headed for President Obama’s desk next week — runs for 2,300 pages, directs regulators to create more than 500 new rules and orders 68 studies. It is a complicated piece of work. As such, there are dozens of small provisions within the bill that will do a lot of good for regular folks, but have not gotten as much attention as the Volcker Rule or the new Consumer Financial Protection Bureau.
One of those is the Emergency Homeowners’ Relief Fund, a $1 billion fund to help unemployed workers stay in their homes. The brainchild of Rep. Chaka Fattah (D-Pa.), ushered into the bill by Rep. Maxine Waters (D-Calif.), the EHRF should be in place by Oct. 1. It will offer qualified unemployed homeowners low-interest loans up to $50,000 to help them keep up with their mortgage payments and remain in their homes.
Legislators modeled the program after Pennsylvania’s successful Homeowners’ Emergency Mortgage Assistance Program, or HEMAP. Since its creation in 1984, HEMAP has helped 41,500 homeowners with $433 million in loans. About half of HEMAP loan-takers have repaid in full to date. And 90 percent of HEMAP participants have avoided foreclosure.
“Millions of American homeowners, through no fault of their own, have lost their jobs in the current economic downturn and have faced the loss of their piece of the American dream,” Fattah said in a statement. “[HEMAP] — which the Emergency Homeowners’ Relief Fund is patterned after — is a proven success in Pennsylvania and it will work nationally. It will keep families in their homes, providing emergency relief from foreclosure for those with a proven history of working and paying their mortgage.” He added: “[F]inancial reform isn’t just about saving banks and markets from failure. It has a message for distressed and unemployed homeowners: We won’t allow you to fail either.”
And EHRF is not the only fund to help the unemployed stay in their homes. On July 1, the Treasury Department started up the Home Affordable Unemployment Program. Through the program, banks and lenders will let unemployed homeowners stop paying their mortgages for set periods of time while they look for work, or will reduce payments to less than 31 percent of the homeowner’s gross monthly income for a set amount of time. (That means that if the homeowner’s income is zero, the payment will be zero. If he or she is taking severance or receiving unemployment insurance, it will be about a third of that.)
Of course, these programs might all be too little, too late for the millions of people left unemployed by the downturn and underwater due to the housing bust.