Last month, US congress passed the financial reform package which included a $1 billion emergency mortgage relief program for unemployed homeowners. The money in this program will be made available to the US Department of Housing and Urban Development on October 1. Under this program, eligible homeowners who are at least 3 months delinquent on their mortgages can get help with up to 12 or 24 months of mortgage payments to a maximum of $50,000 in federal loans. According to the bill, the assistance can be loans, advances of credit or emergency mortgage relief payments. As this program is rolled out in the next few weeks, our readers can get more details by visiting the website of the US Department of Housing and Urban Development.
This latest program of the government follows two other federal programs already providing assistance to unemployed homeowners.
The first program started last August 1, where the US Treasury Department offered extra help for unemployed homeowners struggling with their monthly mortgage payments under their Home Affordable Unemployment Program (HAUP). This unemployment program offers homeowners a forbearance period to temporarily reduce or suspend their monthly mortgage payments while they seek employment. This is a forbearance program, which means that the unpaid amount can be added to the balance or repaid in other ways. The minimum forbearance period is 3 months although the lender may extend it depending on the guidelines. During the forbearance period, a homeowner’s monthly mortgage payment must be reduced to no more than 31 percent of their gross monthly income. The lender can also decide to temporarily suspend payments in full. .
Servicers under this program may not initiate foreclosure proceedings while a homeowner is being evaluated for the unemployment program or in the forbearance period. To qualify, homeowners must not be more than 3 months delinquent and must meet other requirements. To determine if you qualify for the unemployment program, you need to contact your mortgage servicer. You should learn your eligibility within ten days of submitting complete documentation to your servicer.
The second program also involves the US Treasury department providing $2.1 billion to struggling homeowners in the hardest hit states. $1.5 billion was awarded to 5 states in June and will award $600 million later. The California Housing Finance Agency got $700 million from the Hardest Hit fund and will start taking applications by November 1. This CAL-HFA program involves the following:
(1) Unemployment Mortgage Assistance – CAL-HFA will provide mortgage payment subsidy to unemployed homeowners who are in imminent danger of foreclosure due to short-term financial problems.
(2) Mortgage Reinstatement Assistance Program – CAL-HFA will provide limited financial assistance in the form of funds to reinstate mortgage loans that are in arrears in order to prevent foreclosures.
(3) Principal Reduction Program – provides assistance to homeowners in who have severe negative equity. CAL-HFA will provide matching capital with financial institutions to reduce outstanding principal balances of qualifying homeowners with negative equity.
(4) Transition Assistance Program – provides homeowners with relocation assistance when it is determined that they can no longer afford their home.
With foreclosures and unemployment still a huge problem in the current economy, it is hoped that some of our readers will be made aware of and benefit from the government programs currently available.
(DISCLAIMER: material presented above is intended for informational purposes only. It is not intended as professional advice and should not be construed as such. Rey Tancinco is a partner at Tancinco Law Offices, a professional corporation with offices in San Francisco, Vallejo, and Manila. The law office website is at: tancinco.weareph.com/old. Rey Tancinco can be contacted at (800) 999-9096 or (415) 397-0808 or via email at: attyrey@tancinco.com
