A federal program to help out struggling homeowners would seem very welcome in today's economic climate, with home delinquency rates on the rise and joblessness holding steady at around 9.1 percent. However, a plan designed to do just that has recently shut its doors with fifty percent of federal appropriations untouched. The Department of HUD blames the too-stringent requirements of the plan for its shortcomings. But the authors of the program blame procrastination on the part of the Housing and Urban Development. Article resource: Federal aid to homeowners ends with only half spent
What you should learn about the program
To be able to help homeowners that could lose their homes with their difficult mortgages, the Emergency Homeowners’ Loan Program set aside $1 billion as part of the Frank-Dodd Wall Street reform bill. In the plan, an individual could get loans which were interest-free that were up to $50,000. An individual could also get 24 months of mortgage assistance instead. To be eligible, homeowners had to have lost 15 percent or more of their income because of the economy or a personal medical condition. The applicants also had to be behind in mortgage payments. They had to be at least 90 days behind.
Not all used
After several extended deadlines, the program decided to no longer accept applications after September 30, after opening on June 20. The program was supposed to help around 30,000 homeowners. It only ended up helping 10,000 to 15,000 of the 100,000 that applied. A ton of the cash won't actually be spent on the plan.
Too many qualifications
Housing and Urban Development claims that the factors to qualify for the loans were too strict. "No one could have anticipated how difficult the statutory requirements make it to reach homeowners," HUD spokesman Lemar Wooley told CNN. Anybody who was accepted will get cash. They will get between $35,000 and $45,000. "This program could have made a difference to save people from being homeless," said Rose Garcia, of the Tierra del Sol Housing Corp. in Las Cruces, N.M. "But it doesn't meet people's needs." Garcia's office saw 174 homeowners apply for the federal money. All but 34 were turned away. There is an example of how strict the rules were. A lot of people couldn’t pay the mortgage because of a sickness a family member had. The rules required the illness to be for the person who owns the house. That meant these people were rejected. Any person out of work for more than 12 months before applying also didn’t get accepted. This was another flaw.
Plan unsuccessful because of HUD, says Frank
One of the creators of the bill, Representative Barney Frank (D-Mass.), said it was HUD's lack of administrative initiative that hindered the success of the plan. “They dragged and dragged their feet,” said Frank. “I believe it was not one of their priorities.” There were lots of delays that the imitative faced. It was able to happen finally in June. The original deadline for applicants was late July. HUD said it had a lot on its plate making sure it had regulations and infrastructure for the plan before it began.
Information from
CNN New York Times HUD Newsytype
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