A recent Government attempt to save homeowners from foreclosures may post dismal results, according to the Department of housing and urban development.
The loan program of emergency homeowners was designed as part of the mortgage Bill Frank Dodd last year to help recently unemployed homeowners behind on their mortgage. At this point, however, HUD expects only 10,000-15,000 people to qualify within the deadline of this Friday. With approximately 100,000 applicants in total, the program could certainly be called less-than-effective.
The plan was to offer interest-free loans which might also be forgiven later to borrowers who had lost 15 percent or more of their income. Also had to be at least 90 days late on their home loans and could prove that once you have found a new job, could afford their monthly payments again. These requirements has proved to be too much for most of the applicants as HUD used a very complicated set of calculations to determine eligibility. In addition, borrowers could not be too far behind on their payments, and could not have lost their jobs over a year ago.
"Nobody could have anticipated how difficult it is to make statutory requirements to reach homeowners," said Lemar Wooley, a spokesman for HUD, as quoted in an article of CNN.
Not only were too stringent for many, but the timing of the programme limited its effectiveness. It was initially delayed by several months and then officially started at the end of June. Originally, HUD was only to allow applicants to apply for six weeks, but ended up giving up a two-and-a-half month.
For those who qualify, they could receive up to $ 50,000 or 24 months, depending on which is fulfilled in the first place. HUD expects average aid pay is between $ 35,000 and $ 45,000. Only about half of the $ 1 billion allocated will probably used for this program.
Amber Nelson on October 3, 2011 in mortgage news
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