Government Grants to Stop Foreclosures
Federal foreclosure prevention programs do not provide direct grants to distressed homeowners; however, help is available in the form of loan modifications, deferred mortgage payments and deferred second lien loans. Federal programs were designed to work in conjunction with state programs to provide the most benefit to the homeowner. The Homeownership Preservation Foundation website has a list of all the federal and state programs that can help homeowners stay in their homes, sell their home to avoid a foreclosure, or get help to secure new housing.
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Home Affordable Unemployment Program
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The Home Affordable Unemployment Program, or UP, helps homeowners obtain a forbearance plan for mortgage payments. A forbearance is a temporary suspension or reduction to mortgage payments. To qualify for help the homeowner must document he will be receiving unemployment benefits during the months of the forbearance. The unpaid principal balance of the loan cannot exceed $729,750 for a single family home to qualify for help, as of 2011. The lender may require the homeowner to receive three months of unemployment benefits before applying for help through UP.
Emergency Homeowners Loan Program
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The Emergency Homeowners Loan Program, or EHLP, is a declining balance loan for up to $50,000, as of 2011. After the homeowner has lived in the house for five years, the balance of the HUD note will begin to decline by 20 percent annually until the balance is zero. The loan can be used to pay for the arrears owed on the loan, and the mortgage payments including homeowners insurance, mortgage insurance and taxes. Prior to the decrease, the homeowner's income could not have exceeded 120 percent of the area median income to get help through EHLP.
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Home Affordable Foreclosure Alternatives
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The Home Affordable Foreclosure Alternatives, or HAFA, provides financial incentives to homeowners who want to sell their home to avoid getting a foreclosure on their record. Homeowners that have negative equity in their property have to obtain approval from their bank to sell the home. The HAFA program offers the homeowner $1,500, as of 2011, to be used toward relocation expenses. To qualify for help, the homeowner must be able to demonstrate a financial hardship and the home facing foreclosure must be her primary place of residence.
Unemployment Assistance
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Homeowners can get help with making their mortgage payments through their local housing finance agency. States that were impacted with the most foreclosures received money from the Hardest Hit Fund. To qualify for help with mortgage payments, the homeowner must have low to moderate income. The subsidy can be used toward principal, interest, tax, insurance and other related costs. The homeowner must be receiving unemployment benefits and be able to demonstrate a financial hardship to qualify for help.
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References
- Photo Credit house image by Svetlana Kashkina from Fotolia.com
