Homeowners in Minnesota who have fallen behind on their mortgages due to unemployment may qualify for up to $50,000 in emergency federal loans to help them avoid foreclosure.
But they have to act fast: the deadline for applying to HUD’s Emergency Homeowners Loan Program is 11 p.m. on Friday.
The new government program has set aside $56 million for Minnesota homeowners. Nationally, the HUD program will provide $1 billion in help for homeowners in 27 states.
Michelle Jones, senior vice president of counseling at CredAbility, a nonprofit consumer credit counseling agency, said the organization has taken nearly 2,400 applications over the phone and online since the program was announced earlier this month.
CredAbility, selected by HUD to take applications from consumers in Minnesota and 16 other states, can be reached at www.CredAbility.org or by calling (800) 984-0979.
For families who qualify, this program provides money to pay past due and future mortgage payments. Homeowners will also receive free credit counseling that will help them get their financial lives back on track. “Homeowners should act quickly – for many, this program is a new chance to save their homes,” says Jones.
Across Minnesota, one in every 673 homes is currently in foreclosure, CredAbility reported.
The EHLP program, created by the Dodd-Frank Wall Street Reform and Consumer Protection Act will help homeowners who have fallen behind on mortgage payments due to unemployment or large medical expenses.
The program will pay a portion of an approved applicant’s monthly mortgage including missed mortgage payments or past due charges including principal, interest, taxes and insurance. Homeowners who meet certain criteria can apply to receive mortgage assistance for two years or up to $50,000, whichever comes first.
Qualified homeowners will receive an interest-free loan that covers the amount of mortgage payments past due on their primary residence. It will also pay 100 percent of the delinquent amount due to cover property taxes, mortgage and hazard insurance premiums, homeowner association fees and foreclosure-related fees. The loan does not have to be repaid, as long as the homeowner continues making timely mortgage payments for five years.
To be eligible for the program, homeowners must meet the following conditions:
• Involuntary unemployment or underemployment caused by adverse economic conditions or a medical emergency or serious injury;
• A minimum 15 percent reduction in income;
• A minimum three months delinquent on mortgage payments and at risk of foreclosure as of June 1, 2011. Homeowners must have a letter from their mortgage company verifying these conditions.
• A reasonable likelihood to resume full monthly mortgage payments by the end of the program’s second year;
• Income must be less than 120 percent of Area Median Income or $75,000 or below;
• Income will be evaluated along with the income of anyone else on the mortgage note. Only the income of the persons on the mortgage note will be used to determine eligibility.
After the July 22 deadline, applications will be reviewed by the participating credit counseling agencies to determine which homeowners are eligible for the program. All homeowners who qualify will be notified before Oct. 1.