I read an article this morning in SmartMoney regarding another Federal program offering money to struggling homeowners.
Called the Emergency Homeowners Loan Program, it is offering loans of up $50,000 that don't have to
repaid if applicants meet certain criteria. This is another attempt to slow the flood of pending foreclosures.
This is being offered to those homeowners who look like they will be able to get back on their feet in a relatively short period of time. Will this help or hinder the homeowner? There are stipulations to not needing to repay the loan.
Payments will be made directly to lender to cover mortgage payments, missed payments and arrearages. When the assistance period ends, which could run up to two years for the homeowner, 20% of the loan is forgiven, and another 20% for each passing year thereafter. So, in order to not repay the loan you must maintain residence another 4 years after the assitance period ends.
If you sell or otherwise vacate the property by other means you will be held responsible for paying back a portion of the loan.
So, what's your opinion on this? Will offering struggling homeowners more debt cure the problem? Or is it just a band-aid effect as the article mentions? It is only being offered to about 30,000 applicants (according to the article roughly 4 to 4.5 million borrowers are behind on their mortgages by at least 90 days or are in foreclosure, accounting for roughly 8% of all mortgages) is this really enough to make a difference with this mortgage crisis?
The program started last week and will take applications through July 22
Comments(0)