The Obama Administration is pumping an additional $3 billion into efforts to help the unemployed or struggling homeowners avoid foreclosure in the nation’s hardest hit housing markets.
An additional $2 billion will be added to the so-called Hardest Hit Fund in 17 states and the District of Columbia. It is the second expansion of the program, announced by President Obama in February.
The fund is administered by the Housing Finance Agencies, independent entities that operate under the direction of board of directors appointed by each state’s governor.
The state agencies can use the additional aid to help troubled homeowners move into the government’s mortgage-reduction program, Home Affordable Modification Program, HAMP. States eligible to receive the expanded support have all registered an unemployment rate at or above the national average over the past 12 months.
In a new program, the U.S. Department of Housing and Urban Development (HUD) will use $1 billion for “bridge loans” of up to 24 months for “homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition.”
The HUD program will offer a declining balance, deferred payment loan of up to $50,000 at zero percent interest to assist eligible borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes and hazard insurance.
Under the program, eligible borrowers must:
- 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;
- Have a mortgage property that is the principal residence of the borrower, and eligible borrowers may not own a second home;
- Demonstrate a good payment record prior to the event that produced the reduction of income.
Interested homeowners can go to http://www.makinghomeaffordable.gov for more information.