Illinois launched a new program to provide up to $345 million in noninterest loans to help homeowners with their mortgage payments.
The program, announced by Gov. Pat Quinn Thursday, will use money from the Treasury Department
's $7.6 billion Hardest Hit Fund that went to 18 states and the District of Columbia. Illinois received roughly $445.6 million.
The latest program from Illinois would provide up to $25,000 in loans providing up to 18 months of mortgage assistance. The loans would be structured over 10 years with the last five years forgiven if the borrower remains current. The program targets roughly 15,000 homeowners.
A similar initiative recently launched in 32 other states that did not receive HHF dollars. The Department of Housing and Urban Development provided
$1 billion to these states to provide interest-free loans to borrowers.
"The best way to stabilize our neighborhoods is to prevent foreclosures before they happen," said Mary Kenney, executive director of the Illinois Housing Development Authority
, which is administering the state initiative. "This program will make a difference in people’s lives and in our communities."
In order to be eligible, the household must prove a 25% income reduction due to unemployment. Total household income cannot exceed 120% of the area's median income. The principal on the mortgage must be less than $500,000.
Negative amortization or interest-only loans will not be eligible.
"The Hardest Hit Fund provides Illinois and other states that were hit hardest in the housing market downturn the funds to implement local programs to assist struggling homeowners," said Treasury Assistant Secretary for Financial Stability Tim Massad. "With these funds, Illinois can provide critical support to homeowners impacted by unemployment so they can remain in their homes and avoid foreclosure."
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