Wall Street Reform Emergency Homeowners Loan Program (EHLP) Update

Dennis Norman St Louis

Dennis Norman

The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama in July,called for HUD to administer and oversee a $1 billion Emergency Homeowners Loan Program (EHLP), to provide assistance, for up to 24 months, to homeowners who are at risk of foreclosure on their home as a result of a substantial reduction in income due to “involuntary unemployment, underemployment, or a medical condition”. This program will be available to borrowers in 32 states, those states that did not receive other funding under the Treasury Departments “Hardest Hit Housing Fund” program.

The EHLP program has been authorized by Congress but HUD is not accepting applications for the program at this time however. HUD’s says their intention is to begin taking applications from homeowners eligible for this program by the end of this year.

The requirements for this program include:

  • The borrower must be at least three months delinquent in their payment and have a reasonable likelihood of being able to resume repayment of their mortgage and related housing expenses within two years;
  • The property must be the principle residence of the borrower, and eligible borrowers may not own a second home;
  • The borrower must have suffered at least a 15 percent reduction in income and have been able to afford their mortgage payments prior to the event that triggered the loss income.

What the EHLP program will do for eligible homeowners:

  • The HUD Emergency Homeowners Loan Program will offer a forgivable, deferred payment “bridge loan” (zero percent interest, non-recourse, subordinate loans) for up to $50,000 to assist eligible borrowers with their mortgage arrearages and payments on their mortgage principal, interest, mortgage insurance premiums, taxes and hazard insurance for up to 24 months.

Below are the states in which homeowners will be eligible for the EHLP program as well as how much of the $1 Billion has been allocated to that state:

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