HUD Program Targets Help For Unemployed Homeowners

21 June 2011

The growing foreclosure crisis continues to rise as high unemployment rates force homeowners dire financial strits. Unemployment is now seen as a major cause of foreclosures; yet, the Administration's housing programs struggle to provide much needed relief to unemployed homeowner.

Last July, the Dodd-Frank Wall Street Reform and Consumer Protection Act provided $1 billion to the U.S. Department of Housing and Urban Development (HUD) to implement the Emergency Homeowners’ Loan Program (EHLP). The program offers loan relief and assistance for up to 24 months to struggling homeowners who are at risk of foreclosure.  It is designed to provide mortgage payment relief to homeowners who have experienced a significant reduction in income of at least 15 percent due to involuntary unemployment, underemployment, or a medical condition.  HUD anticipates the program to reach up to 30,000 distressed borrowers in 27 states and Puerto Rico with an average loan of roughly $35,000.  NeighborWorks America is in charge of administering the program along with the five states that operate programs which are substantially similar to EHLP including Connecticut, Delaware, Idaho, Maryland and Pennsylvania. 

Though the program was announced last fall, it has been significantly delayed; up until yesterday near ten months later, for example, applications were only being accepted in the five substantially similar states listed above. The Neighborworks programs were delayed because of various implementation challenges.  Yesterday, Neighborworks finally announced that the EHLP pre-application process has begun.   NeighborWorks posted the forms and information to apply for EHLP along with the recipients of the EHLP household allocations and program grant funds on its website located here.

While it is significant progress that the processing for pre-applications has started, NACA and other consumer and housing advocates worry that the strict eligibility requirements and the complexity of the program design will further delay the program, and that all of the EHLP funds will not be committed before the end of the program on September 30, 2011.  For instance, placing barriers in front of potential EHLP participants such as high minimum monthly payments or eligibility restrictions for those that are facing bankruptcy or delinquent on student loans will only contribute to the inability of HUD to disburse the appropriate funds before the September deadline.  In addition, little marketing has been done for this program and thus not many homeowners are aware that this program exists. HUD will need to immediately implement strategic marketing to homeowners with radio, TV or print media in order to make the most of this EHLP funding while it's available.

The Making Home Affordable Programs were allocated approximately $50 billion in early 2009 to deal with foreclosure; to date only $1.85 billion of these critical funds have been spent to help homeowners. We do not want to see HUD make the same mistake with EHLP as HAMP and the other Making Home Affordable programs.  HUD needs to take EHLP by the reigns to simplify program implementation and get the word out quickly to homeowners.

Ellen M. Taverna
Legislative Associate, National Association of Consumer Advocates (NACA)