Federal program available to pay mortgages of Minnesotans facing foreclosure uncertainty
Minnesotans may apply for the Emergency Homeowners’ Loan Program, a new federal program to help homeowners who are at risk of foreclosure because of economic or medical hardship.
Under the EHLP program, eligible homeowners can qualify for up to $50,000 in interest-free, forgivable loans to bring their mortgage current and assist with future payments. The U.S. Department of Housing and Urban Development has made more than $50 million available for the program in Minnesota, which is expected to benefit 1,405 homeowners statewide. Applications for the EHLP program will be accepted between July 5 and July 22.
“This is one of the first tools available to help unemployed homeowners avoid foreclosure. It is a hand up, not a hand out and will serve as a much needed bridge to keep people in their homes until they can find a job,” said Mary Tingerthal, commissioner of Minnesota Housing, which is promoting the partnership with the Minnesota Homeownership Center. “I urge people who may be eligible to act quickly and apply for help before July 22.”
Homeowners who wish to apply for the program must meet several criteria, including:
• Have faced an income decline of at least 15 percent due to involuntary unemployment or underemployment, or medical issues.
• Have been unable to make their mortgage payment for at least the past three months.
• Reside in the mortgaged residence.
“We know that more than two-thirds of homeowners who seek our foreclosure counseling services have fallen behind on their mortgage because of unemployment, underemployment or medical issues,” said Julie Gugin, director of the Minnesota Homeownership Center. “This program will offer an important lifeline to a large segment of homeowners who otherwise struggle to find options to stay in their homes.”
Under the EHLP program, selected homeowners will receive up to $50,000 to bring outstanding mortgage, tax and insurance payments current, and to assist with future mortgage payments. The bridge loan program is designed to help homeowners weather the current economic downturn, and funding could end before the two-year program if a recipient’s income recovers to pre-recession levels within that period. The interest-free loan is also forgivable for homeowners who stay in their home five years after the two year program’s conclusion, with 20 percent of the loaned value forgiven each year prior.
Locally, the program is supported by the state’s extended network of housing agencies and advocates, including Minnesota Housing and the Minnesota Homeownership Center.
Homeowners wishing to participate in the EHLP program must submit evidence of qualification and a complete pre-application via mail to the Minnesota Homeownership Center by 5 p.m. July 22. Required documentation includes a complete and accurate pre-application screening worksheet, a pre-applicant Third Party Authorization and a Tennessen Warning. All complete and eligible pre-applications will be routed to HUD for entrance in the program lottery.
The center expects that HUD will have selected the program’s 1,405 participants in early August, and will be assisting the federal agency in follow up to selected homeowners. The EHLP program stands to decrease the state’s projected number of 2011 foreclosures by more than 5 percent, making a significant step toward ending foreclosures for a number of homeowners.
Congress provided $1 billion dollars to HUD, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, to implement EHLP. The program will assist homeowners who have experienced a reduction in income and are at risk of foreclosure due to involuntary unemployment, underemployment, due to economic conditions or a medical condition. HUD allocated a total of $55,848,137 to fund this emergency loan program in Minnesota.
Homeowners seeking additional program guidelines and applications materials should visit the EHLP Minnesota website at www.EHLPMinnesota.com or call the Minnesota Homeownership Center at (866) 462-6466.
The Minnesota Homeownership Center also manages several additional federal partnerships and programs aimed at preventing foreclosures across the state, including a recently-announced partnership with Fannie Mae. The Center also oversees the Homeownership Advisors Network, a statewide coalition of agencies that offer ongoing, free foreclosure counseling to all Minnesota homeowners in danger of falling behind on their mortgage or facing foreclosure.
“EHLP is a great program for a specific segment of people, but it’s just one of many resources available to help homeowners avoid foreclosures,” added Gugin. “We would encourage any homeowner who is in danger of foreclosure to contact our statewide network of free counseling agencies.”