There is not a lot of information on these two programs, but I’ve come up with a few links. The first is a HUD program with taxpayers giving unemployed homeowners facing foreclosure $1 BILLION to keep their homes. The second is realtors is specific states earning $1,200 from Fannie Mae for sale of a home in foreclosure. A sale to an investor does not qualify.
Beginning today, homeowners in 27 states can file preliminary applications for the Emergency Homeowner’s Loan Program (EHLP). Eligible homeowners can obtain interest-free loans of up to $50,000 to help cover mortgage expenses for up to two years.
The program is available to homeowners who have seen their incomes fall and who could lose their homes to foreclosure due to circumstances beyond their control, including involuntary unemployment, underemployment, economic conditions or an illness.
The program is a counterpart to the $7.6 billion Hardest Hit Fund and is available only to homeowners in states not covered by that program. The Hardest Hit Fund provides foreclosure avoidance assistance to homeowners in states that have been most seriously affected by the declining housing market and economic downturn.
The new initiative is expected to provide assistance to up to 30,000 homeowners, with loans averaging $35,000 each. Loans may be used to pay a portion of monthly mortgage bills, including missed mortgage payments or past due charges including principal, interest, taxes, insurances, and attorney fees.
Did you see that these are interest free loans? So many questions:
1) How can one qualify financially for one of these loans?
2)Is there any requirement that taxpayers actually be paid back?
3) What happens if this unemployed person, in foreclosure cannot pay the money back?
4) Must the homeowner have the equity in their home to secure the loan?
5) Will buyers who purchased through the Community Reinvestment Act have access to these loans, since most were not required to qualify to put money down?
6) Did Congress approve this expenditure?
This article by Michael Kraus at Total Mortgage says the $1 BILLION comes from the Dodd-Frank regulatory reforms, and the loans will be made in 27 states and Puerto Rico!!! Not only has Congress authorized 99 weeks of unemployment, but we are making bridge loans to unemployed homeowners, up to $50,000!
This program, while well-meaning, is like trying to fight a three-alarm fire with a squirt-gun. Helping 30,000 people is good, but won’t have any real impact on the overall housing situation, nor is it addressing the underlying issues that brought us to this point.
To be clear, Mr. Kraus seems to believe the $1 BILLION is not enough, especially compared to other bailouts, but as you will see below, the helping hand to Fannie Mae has now reached $99.7 BILLION (that’s if we can believe what we read – it’s probably more). Add to that, 99 weeks of unemployment benefits totaling $100 BIILLION. I won’t be surprised if the 99 weeks are extended.
The $1200 fee to realtors is the second attempt to move Fannie Mae homes. Last year $1500 was offered for a time. The problem is, many believe that another wave of foreclosures is coming soon.
Fannie Mae is also still offering 3.5% of the sales price to be paid toward the buyer’s closing costs. My understanding is that the home must close on time to get this incentive. This incentive has been extended to contracts closing by October 31st.
In 2008, taxpayers bailed-out Fannie Mae, and has continued to do so. This report is dated May 7, 2011:
Fannie Mae posted its latest quarterly loss Friday, saying a recent house-price double dip caused the loss.
The government, which will now have to shell out more money to cover the latest losses, amounting to $6.5 billion, will have paid $99.7 billion since the mortgage company started drawing on Treasury funds in September 2008.
The costs have now reached a level greater than the annual economic output of some smaller nations.
Last year’s first-quarter loss was $11 billion.
It appears that little has been changed about the way the Community Reinvestment Act makes loans. The newest rule “encourages depository institutions” to support development activities administered by HUD. Those “development activities” are largely areas with “high rates of foreclosure and vacancy.” I don’t know how this differs from before the “new” rule, but perhaps this alludes to the $1 BILLION mentioned above:
The new rule encourages depository institutions to make loans and investments, and provide services to support NSP activities in areas with HUD-approved plans.
We are moving on down the track to financial ruin, and the engineers have just hooked up a new, fresh, gassed-up and shiny engine. The Lonely Conservative has more, including the tidy little fact that many will NOT be required to pay back their loans.