Financial Reform Passage Ushers $1bn in Mortgage Help for Unemployed
When the Senate passed the financial reform bill yesterday, it cleared a $1bn emergency mortgage relief program for unemployed homeowners. According to the Wall Street Reform and Consumer Protection Act, which passed the Senate and awaits President Obama’s signature, an Emergency Homeowners’ Relief Fund is established and to be administered by the Department of Housing and Urban Development (HUD). The program will be fully implemented by Oct. 1. The bill also authorizes HUD to administer a program that would award grants to those providing foreclosure legal assistance to low- and moderate-income homeowners and tenants. When the House version of the bill was passed in December 2009, the unemployment program called for $3bn of funding. But after a House-Senate conference held in June, the amount was reduced to $1bn. Under the program, qualified homeowners will be able to borrow up to $50,000 to assist them with their mortgage payments, provided that they have a reasonable prospect of resuming mortgage payments within 24 months. The program was modeled after the Homeowners’ Emergency Mortgage Assistance Program (HEMAP) introduced in Pennsylvania in 1984 and developed by congressman Chaka Fattah (D-PA). Since its introduction, HEMAP provided 41,500 homeowners more than $433m in emergency mortgage assistance, and 19,700 of them have repaid their loans in full. Almost 90% of these homeowners avoided foreclosure. “It will keep families in their homes, providing emergency relief from foreclosure for those with a proven history of working and paying their mortgage,” Fattah said of the new program. The Treasury Department launched another program to provide mortgage assistance to unemployed homeowners. The Home Affordable Unemployment Program (HAUP) began accepting applications July 1. Write to Jon Prior.