This week I wanted to share with you information I recently received from my friend Joel Doelger who is the Director of Counseling at Credit Counseling of Arkansas. Doelger tells me that a recently unveiled Emergency Homeowner’s Loan Program (or “EHLP” for short) has great potential to help a relatively narrow slice of delinquent homeowners. It’s targeted to those who have suffered involuntary loss or reduction of income as a result of the general economic slowdown, or as a result of health problems. The program offers a loan to bring the mortgage current (pay arrearages of principle, interest, taxes, insurance, fees, and foreclosure costs), as well as subsidize up to 24 months of ongoing mortgage payments while the homeowners re-establish financial stability.
Perhaps the best thing is that it’s a 0% interest, forgivable loan, which will disappear if the homeowner is able to re-establish full mortgage payments before the 24 months is up. If they can, and if they stay in the home, the loan is reduced 20% annually, until it disappears in 5 years.
There are a bunch of restrictions/qualifying criteria for the program. To name a few:
• The home has to be their primary residence. This can’t be used for investment properties.
• The combined gross annual income of those on the mortgage note cannot exceed $75,000
• The property cannot have more than two liens on it.
• The homeowner cannot be delinquent on federal taxes or federal loans
• All persons on the mortgage note need to be U.S. citizens, U.S. non-citizen nationals, or qualified aliens.
There are other criteria as well. The best current source of information on the program, and a good place to review the qualifying criteria is NeighborWorks’ website: www.findEHLP.org. HUD created the program, and has asked NeighborWorks to oversee it.
HUD is expecting the number of program applicants to exceed the available funding. For that reason, there is a two-stage process to apply for EHLP. Interested homeowners are asked to submit a pre-application form to a participating HUD-approved housing counseling agency, such as Credit Counseling of Arkansas. They can access the pre-application form from the CCOA website (www.ccoacares.com) or by calling them at (479-521-8877 or 800-889-4916) to request a copy. Homeowners could also find the pre-application at the NeighborWorks website mentioned above. Once the homeowner completes and submits the forms to a housing counseling agency, his/her case will be put into a pool of names. NeighborWorks will then conduct a lottery of each counseling agency’s submissions. Those at the high end of the lottery will be invited by the counseling agency to bring in their complete documentation and apply for the EHLP loan. If any of the initially selected homeowners do not respond, or fail to qualify for the program, the counseling agency will attempt to contact the next homeowner on their list.
Unfortunately, you’ve got to get moving. Perhaps the most crucial thing is that the window on this program is very brief. All pre-applications must be submitted by July 22, 2011. If a homeowner fails to submit a pre-application by that date, she or he will not be eligible for the lottery, and hence, not eligible for the EHLP loan. Being in the lottery “select” group does not guarantee that a homeowner will get an EHLP loan. It only guarantees the chance to apply.
There are two other points worth mentioning. First, there is no cost to apply for this program. So lack of funds should not be an excuse for failing to apply. Also, it’s worth noting that, should a homeowner qualify for the program, the EHLP loan funds are paid directly to his/her mortgage company. Those funds do not get deposited in the homeowner’s bank account.
“Right now, with such a tight deadline on the program, we’re doing all we can to help get the word out,” said Doelger. “There are a number of housing counseling agencies in Arkansas who are accepting pre-applications. I don’t expect all troubled homeowners to apply for this program through us. I just want to make sure that they hear about the program, and if eligible, they submit a pre-application to they can be in the running to get help.”
House to House is written by Amy Glover Bryant, APR and distributed weekly by the Arkansas REALTORS® Association.