More Help for Unemployed Homeowners
Today, the Obama administration announced it will spend $3 billion more to help jobless homeowners.
First, the Department of Housing and Urban Development is starting up the Emergency Homeowners Loan Program, created in the Wall Street reform bill. The program helps the unemployed pay their mortgages by providing interest-free loans of up to $50,000. Borrowers can use the funds to pay their “mortgage principal, interest, mortgage insurance, taxes and hazard insurance” for up to two years or until they find work.
To qualify, homeowners need to be at least three months behind on their mortgage payments, demonstrate the ability to resume payments within two years, live in their home, own only one home and have a good history of paying bills. HUD did not say which states or cities it will offer the program in.
Second, the Treasury Department is expanding its Hardest Hit Fund, which provides direct mortgage aid to the jobless in states with high unemployment rates. The fund is already working in Arizona, California, Florida, Michigan, Nevada, North Carolina, Ohio, Oregon, Rhode Island and South Carolina. Now, homeowners in Alabama, Illinois, Kentucky, Mississippi and New Jersey are also eligible.
These programs are all well and good. But as I wrote in June, for millions of homeowners, they might be too little, too late. The foreclosure crisis has already peaked. And neither program addresses the underlying problems of unemployment and homeowners being underwater on their mortgages since the collapse of the housing bubble.
“We remain committed to helping struggling homeowners, and this program will provide additional assistance to states hit hardest by unemployment,” Assistant Secretary for Financial Stability Herb Allison said in a statement. “This is part of the Administration’s comprehensive housing policy that has helped to stabilize a fragile housing market and allows responsible homeowners the chance to reduce their monthly mortgage payments to affordable levels.”