With unemployment rates staying steady at 9.1 percent and overdue mortgage rates increasing, a government-backed program designed to help out troubled Americans with their mortgage payments could not seem more accepted. However, a plan designed to do just that has recently closed its doors with fifty percent of federal appropriations untouched. The Department of Housing and Urban Development states that the factors to meet the criteria for the loans were too strict to allow its being fully used. But the creators of the regulation say it is procrastination on the part of the Housing and Urban Development that created the troubles. Article resource: Federal aid to homeowners ends with only half spent
All about the Emergency Homeowners’ Loan Plan
In order to help homeowners that could lose their homes with their difficult home loans, the Emergency Homeowners’ Loan Plan set aside $1 billion as part of the Frank-Dodd Wall Street reform bill. Individuals were able to either get 24 months of mortgage assistance or $50,000 in interest-free, forgivable loans with the plan. To be eligible, homeowners had to have lost 15 percent or more of their income because of the economy or a personal medical condition. Applicants had to be 90 or more days behind in home loan payments also.
Cash sent to treasury
On June 20, the plan began. It then, after many extended deadlines, closed on Sept 30. The program was intended to help around 30,000 homeowners. It only ended up helping 10,000 to 15,000 of the 100,000 that applied. The program is going to end without all the cash being spent. At least fifty percent won't be used to help homeowners.
Too many qualifications
Homeowners' criteria were too strict. That is why Housing and Urban Development believes it did not work. "No one could have anticipated how difficult the statutory requirements make it to reach homeowners," HUD spokesman Lemar Wooley told CNN. Anybody who was accepted will get cash. They'll get between $35,000 and $45,000.
"This program could have made a difference to save people from being homeless," said Rose Garcia, of the Tierra del Sol Housing Corp. in Las Cruces, N.M. "But it doesn't meet people's needs."
Garcia’s office saw quite a few homeowners attempting to get help. About 174 homeowners applied. All but 34 were turned away. There is an example of how tight the rules were. Some people could not pay the mortgage due to an illness a family member had. The applicant got rejected unless the homeowner themselves had the illness. Other individuals that didn’t get help were those who had lost their jobs more than 12 months before applying.
Needed to be a priority program
One of the creators of the bill, Representative Barney Frank (D-Mass.), said it was HUD's lack of administrative initiative that hindered the success of the plan. “They dragged and dragged their feet,” said Frank. “I believe it was not one of their priorities.”
The initiative faced several delays at its inception and was finally rolled out in late June. The initial deadline for applicants was late July. HUD said it had a lot on its plate making sure it had regulations and infrastructure for the plan before it began.
New York Times