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Republicans Attempt to Kill Assistance for Unemployed Homeowners

March 7, 2011 - by Donny Shaw

One of the foreclosure relief programs that House Republicans are looking to shut down this week has been a widely-recognized failure. It was supposed to provide incentives for mortgage lenders to voluntarily renegotiate loans for underwater homeowners, but it never caught on. The other program, however, hasn’t gone into effect yet, but because it doesn’t require the cooperation of lenders it’s expected to be more successful when it does. The program, which is called Emergency Mortgage Relief, would provide government bridge loans to help unemployed homeowners avoid foreclosures. Since we can’t evaluate it in action, here’s a closer look at how’s it’s supposed to work once it starts up.

The program was created back in 1975, but it has been without funding for decades. Last year, Congress authorized $1 billion to be spent on renewing the program as part of the Dodd-Frank financial reform bill. The Department of Housing and Urban Development, which will run the program, is currently planing on launching it officially on April 1.

In order to qualify for a loan under the Emergency Mortgage Relief Program homeowners would have to meet a series of guidelines that have been designed to ensure that participants have reasonable mortgages to begin with and are likely to be able to repay the loan when they reenter the workforce. According to a notice from HUD published recently in the Federal Registry, the eligibility requirements include:

  • They must have experienced a “substantial reduction in come due to involuntary but temporary unemployment or underemployment due to adverse economic conditions or medical conditions.”
  • Their income must have been reduced by at least 15% because of the unemployment or medical situation.
  • Their income before the reduction must not have been more than 120% of the median income in their area.
  • Their debt-to-income ratio before becoming unemployed or suffering from their medical condition must be 55% or less.
  • Foreclosure must be probable. Specifically, the homeowner must be at least three months behind on their mortgage payments.
  • The mortgaged property must be their primary residence.

If that all matches up and an application is approved, HUD would provide the homeowner with a zero-interest loan that can be applied to back payments and fees, plus up to 24 months (or up to $50,000) of mortgage payments. HUD will contribute 100% towards back payments, but the homeowner is required to contribute 31% of their monthly income (or at least $25 per month; whatever’s higher) towards future payments. If during the loan period the homeowner sells the house, fails to pay their monthly contributiont, or their income moves above 85% of its pre-unemployment/medical crisis level, the HUD loan will be phased out.

Once the loan is up, repayment can be deferred by up to five years and can be paid off over a period of up to 7 years. The Congressional Budget Office has estimated that 50%, or $500 million, of the $1 billion lending authority will ultimately be repaid.

 

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Comments

  • blackychikiz15 03/07/2011 1:25pm

    this is sad republicans bastards go 2 hell

  • Comm_reply
    badams82 03/09/2011 5:13pm

    Yes, they should go to HELL and stay there!

  • sontagkc1 03/07/2011 6:31pm

    I used to be a republican, now after being laid off for nearly 2 years.
    I can officially say I am an Independent….. :)
    I understand we have a deficit, due to the GREED in this country.
    I don’t think our forefathers would be very proud…
    Government for the people… by the people..etc…Not any more seems to be more like the Government is for the Government and as long as they are getting a paycheck for get about those who aren’t, I have no job, no healthcare and at 48 I am unlikely to get either, my American dream is in the can.

  • Comm_reply
    badams82 03/09/2011 5:12pm
    :) Independent seems like the only way to go at this point. Shoot, after what the Wisc. Senate did today and then reading about this there, is no doubt that the GOP will do whatever it takes to get what they want. To keep the middle class suppressed while they keep feeding the top 2%. It is so disturbing to see this.
  • nmeagent 03/07/2011 6:46pm

    A better title for this post would be:

    “Republicans Attempt to Kill Unconstitutional Federal Assistance for Unemployed Homeowners”

  • 530i 03/08/2011 5:19am

    I’m really getting sick of the liberal spin by the writers on this site. Yes, lets get rid off all the evil republicans so we can vote ourselves more cash from the government. Weeee! Print more for us Uncle Ben! I’m behind on my car payment too, let’s pass a bill to give me money for that. Since all these big evil corporations and banks destroyed the economy, my government owes it to me. Its my right!! The government should be taking care of me when things don’t go well. Never mind I still live better than 80% of the rest of the world.
    Just as the founding fathers predicted, once the people realized we could vote ourselves money from the government, we would be brought into slavery. Hello China, hello IMF. How may we serve you?

  • Comm_reply
    suzieqs 03/08/2011 7:14am

    You know I’m sure glad you aren’t unemployed and don’t have to worry if you’re going to lose your home. You and all of your GOP cohorts are so selfish and self-centered that all you can think about is yourself.

    So remember this what goes around comes around (or vice versa) be careful what you wish for, while you might think that this is a good thing now, you might just be the next fish out of water and into the frying pan.

    You’re placing the blame on the wrong area. It’s those fat cat wall street bankers that put us into this mess..

  • Comm_reply
    fakk2 03/09/2011 4:23pm

    @suziegs,

    not to say you’re wrong in your opinion, but saying “You…are so selfish and self-centered that all you can think about is yourself” is absolutely correct. We must be selfish and lookout for ourselves because that’s how life works. We must fight for what we believe in (left or right) and we must stand firm against tyranny (from either side). If someone says “I want a law to make people stop smoking”, then the smokers who don’t like it should oppose it. If we’re not selfish, we will fail.

    Also, once again, I’m not trying to disprove your opinion or say you’re wrong, but saying “It’s those fat cat wall street bankers that put us into this mess” begs the question: who made someone sign something, like a mortgage or a credit card application, they they didn’t want to sign?

  • Comm_reply
    badams82 03/09/2011 5:21pm

    My sentiments exactly. Some individuals do not know how to count their blessings. They, must remember to enjoy them while they can & keep in mind that everything is temporary. Pride and arrogance can only lead to disaster and lead them to fall hard. Let’s, hope this is not the only way they learn to build humility, empathy and compassion.

  • Comm_reply
    dwisman 03/13/2011 5:20am

    Do you really think it was just the banks and corporations that destroyed the economy? Without government legislation to open borders, the greedy corporations would not have jumped ship!

    My house payment.. 1st, 2nd mortgage, tax, and insurance is $550. a month. My unemployment benefits ran out in December after I completed 2 years of schooling AFTER I lost my $40k job a year. I don’t use credit cards, and I’ve always paid cash for used vehicles. I am 55 years of age, and age discrimination is rampant in this country. I see no reason why Republicans object to giving us loans to keep us in our homes. If I lose my house, the welfare department will pay for low income housing in a shithole low-income rental that will exceed the cost of my house payment…..and that, I won’t have to repay!! There are millions of American’s like me!!

  • 530i 03/08/2011 8:07am

    There is no end to the number of worthy causes that can be funded, and I really do mean worthy, and I really do mean endless. So this becomes a question of principle, not one of practice. Why don’t we print/borrow enough money to make sure all the children of the world don’t go hungry? We must be heartless to let children starve, right?
    So the question is, what should the federal government pay for? Do we change the rules for every crisis? How much should we borrow from China and other foreign lenders? Do we destroy our very nation by borrowing more than we can ever pay back so 5% of the country can be spared the hardship of foreclosure that is a direct result of short-sighted government intervention in the housing market, and lack of SEC oversight of CDS/derivative investment practices?
    Where does it stop? It stops when we declare bankruptcy as a nation and the IMF, UN, China, or whoever bails us out get to dictate how our country will run. Game Over. Who is selfish?

  • 530i 03/08/2011 9:56am

    A simple illustration:
    Why don’t you personally, max out your personal credit cards, and lines of credit, to help people in need all around you?

    Two reasons: 1. It is personal economic suicide, and 2. As nice as it would be to help everyone, it is not your personal responsibility to do it.

    Now, just substitute the word ‘Government’ everywhere you see the word ‘personal’ and you will see that it is the same principle.

  • pjmerc 03/09/2011 8:12am

    Our representatives ceased to represent us a long time ago. Look at the money trail and you’ll know who they serve, and it ain’t us. This is what caused the bad loans. This is what caused the bailouts. This is what allowed Wall Street to look the citizens of this country in the eye and say “Screw you! Unless you bail us out because of our greed, we’ll take this whole economy down!” On both sides of the aisle, just look at who worked where before they became our “representatives”. Even if the party is changed, the money is still doled out and there are still takers. We don’t even have a representative democracy anymore, because the candidates that we get to choose from are already picked out for us. We have an oligarchy, and it’s spent this country almost into oblivion, no matter if it’s a war or wars, or bailouts or federal programs or just plain embezzlement. It will take a hell of a grass roots revolution to get rid of it.

  • Comm_reply
    fakk2 03/09/2011 4:31pm

    very true pjmerc. The starkest example that comes to mind is the GM bailout. It’s amazing how the UAW, who grossly donated to Obama & the Democratic party, got 20% of GM’s shares, yet the bondholders only got 10% to divide amongst themselves.

  • Comm_reply
    luminous 03/09/2011 8:59pm

    Your aware that the UAW was the largest bond holder of GM prior to the bankruptcy, due to GM using the employee pension fund as their personal banking asset and handing themselves below market rate bonds from said pension fund yes?

    Now to be truthful the razor cut the UAW pension toke was less then that of other bond holders, but that is only by counting the value of those bonds at the time of bankruptcy. If you account for lost interest and legally required matches that where never payed the union pension(the employees retirement) by far and large got screwed.

    But whatever it is a free country, believe whatever fiction keeps you happy.

  • Comm_reply
    fakk2 03/10/2011 12:53pm

    @luminous,

    Actually no, I had no idea the UAW was the largest bond holder of GM. That’s pretty amazing and does shed a new light on things, if it’s true. I’m sure it will be possible to find out if it’s true or not.

    But let me ask, when you say “believe whatever fiction keeps you happy”, well, what fiction in my statement are you referring to? It’s a fact the UAW grossly donated to Democrats, including Obama, and it’s also a fact that they got 20% of GM whereas other bondholders got 10% to divide amongst themselves. So, where is the fiction?

  • Moderated Comment

  • nana 03/12/2011 3:32am

    These people that want to put down the 99ers need to walk in the shoes of the over 50, unemployed for 2+ years, etc. Try it send out 100 resumes and see how many calls you get.

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