STOP HOME LOSS SERIES: You May Qualify For HUD’s New Interest Free Loans

The Obama administration will offer $1 billion in zero-interest loans to help homeowners who’ve lost income avoid foreclosure as part of $3 billion in additional aid targeting economically distressed areas.  The Department of Housing and Urban Development plans to make loans of as much as $50,000 for borrowers in the hardest hit areas to make mortgage, tax and insurance payments for as long as two years through the HUD Emergency Homeowners Loan Program.  This new program will complement Treasury’s Hardest Hit Fund (announced in Feb. 2010) by providing assistance to homeowners in hard hit local areas that may not be included in the hardest hit target states as listed below. Those areas are still being determined.

Some of the states eligible to receive funds through this additional assistance are as follows:

Alabama 
California
Florida 
Georgia 
Illinois 
Indiana 
Kentucky
Michigan
Mississippi
Nevada
New Jersey
North Carolina
Ohio 
Oregon

Rhode Island
South Carolina
Tennessee
Washington, DC
 

The HUD Emergency Homeowners Loan Program will work through a variety of state and non-profit entities and will offer a declining balance, deferred payment “bridge loan” (zero percent interest, non-recourse, subordinate loan) for up to $50,000 to assist eligible borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes and hazard insurance for up to 24 months.

Under the HUD Emergency Homeowners Loan Program, eligible borrowers must:

1.  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.  Have a mortgage property that is the principal residence of the borrower, and eligible borrowers may not own a second home;

3.  Demonstrate a good payment record prior to the event that produced the reduction of income.

HUD will announce additional details, including the targeted communities and other program specifics when the HUD Emergency Homeowners Loan Programis officially launched in the coming weeks.  The initiatives will help “a broad group of struggling borrowers across the country and in doing so further contribute to the administration’s efforts to stabilize housing markets and communities,” Bill Apgar, HUD’s senior adviser for mortgage finance, said in the statement.

Source: HUD Press Release