The Emergency Homeowners’ Program—a $1 billion federal program designed to assist the unemployed—is due to expire on Friday, having assisted only a fraction of those who applied. In fact, of the 100,000 applicants, only 10,000 to 15,000 are expected to receive aid.
The program aimed to offer interest-free, forgivable loans to those homeowners who lost a minimum of 15 percent of their income due to economic factors or their own medical condition. In order to qualify, applicants needed to be at least 90 days delinquent carrying mortgage debt and facing foreclosure. They also had to demonstrate that they would be able to resume payments if they found a new source of employment.
While the few who made the cut can anticipate receiving between $35,000 and $45,000 in aid, the program’s statutory requirements made it unexpectedly difficult to reach the majority of people. This was a disappointment to a great many who had hoped that the program would be a landmark move toward providing greater support for a portion of delinquent homeowners not currently assisted by any other federal initiatives.
Program Hindered by Excessively Strict Guidelines
The Emergency Homeowners’ Program was passed in 2010 as part of the Dodd-Frank Wall Street reform bill. Its problems were a surprise to many, as it was based on a very successful initiative in Pennsylvania that has aided tens of thousands of residents since 1983.
However, it was the federal program’s income and delinquency guidelines that led to its downfall. These excessively stringent requirements—involving the use of a complex formula using monthly payments, income, and arrears—meant that many seemingly-eligible applicants were unable to receive assistance.