Fannie Mae directed its mortgage servicers to fully participate in a Department of Housing and Urban Development program to provide assistance to unemployed borrowers, and revealed how these applications will be considered. Under the direction of the Dodd-Frank Act, HUD will provide $1 billion through the Emergency Homeowner’s Loan Program in 32 states, including five that will use previously established but similar programs. EHLP will offer interest-free loans as high as $50,000 to help the unemployed make their mortgage payments. Recipients must contribute either 31% of their monthly income after losing their job or $150 per month to the payment – whichever is more. Fannie directed its servicers to halt the foreclosure process when the program’s fiscal agent the Bank of New York Mellon (BK) or the state Housing Finance Agency notifies the servicer the borrower has been approved. But the EHLP application date must come more than 30 days before the foreclosure sale date. Borrowers have until July 22 to file applications with their state HFA in order to be considered for the program. HUD will then randomly select a number of pre-screened applicants until the EHLP funding is used. A counseling agency belonging to the NeighborWorks America network will then contact the borrower in order to fill out a full EHLP application packet. The Bank of New York Mellon will then conduct a second review and notify the servicer. HUD completes a third review and notify the borrower by Sept. 30. For the five states using their own programs, Connecticut, Delaware, Idaho, Maryland and Pennsylvania, the process will be slightly different. The mortgage servicer must sign an agreement with HUD stating that to the best of its knowledge the borrower is at least 90-days delinquent. EHLP allows a borrower to miss one month’s payment during the assistance period, which can last up to 24 months. If a borrower does not make it up the next month, the assistance is terminated. “Effective immediately, servicers must comply with this lender letter by participating in the program’s pre-application and application processes on mortgage loans owned or guaranteed by Fannie Mae,” the government-sponsored enterprise said in recent guidance. Write to Jon Prior. Follow him on Twitter @JonAPrior.