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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

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suzieqs 03/08/2011 7:14am
in reply to 530i Mar 08, 2011 5:19am

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..

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.

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?

fakk2 03/09/2011 4:23pm
in reply to suzieqs Mar 08, 2011 7:14am

@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?

blackychikiz15 03/07/2011 1:25pm

this is sad republicans bastards go 2 hell

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.

dwisman 03/13/2011 5:20am
in reply to 530i Mar 08, 2011 5:19am

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!!

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badams82 03/09/2011 5:13pm
in reply to blackychikiz15 Mar 07, 2011 1:25pm

Yes, they should go to HELL and stay there!

fakk2 03/09/2011 4:31pm
in reply to pjmerc Mar 09, 2011 8:12am

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.

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nmeagent 03/07/2011 6:46pm

A better title for this post would be:

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

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fakk2 03/10/2011 12:53pm
in reply to luminous Mar 09, 2011 8:59pm

@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?

badams82 03/09/2011 5:12pm
in reply to sontagkc1 Mar 07, 2011 6:31pm
:) 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.

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