Congress Approves $1 Billion for Homeowners Who Need Help Paying Mortgages

Homeowners facing a job loss or health problem who need short-term help making mortgage payments will be pleased to know that Congress included a $1 billion provision in the Wall Street reform bill which is aimed at helping homeowners with their mortgages.

The Emergency Mortgage Relief program will make more than $1 billion in federal funds available to families about to lose their homes. Homeowners may borrow up to $50,000 if they can show they have a reasonable prospect of resuming mortgage payments within 24 months.

To be eligible, homeowners must be at least three months delinquent and the lender must have begun foreclosure.  There also must be a “reasonable prospect” that the homeowner can resume payments, and the loan must be on their primary residence.

San Francisco Chronicle columnist Kathleen Pender wrote a very thorough analysis of the program in her column in today’s S.F. Chronicle, although she points out in her column that there are many unanswered questions. Pender has a knack for sifting through huge, multi-faceted legislation and finding nuggets which haven’t previously received a great amount of media attention.  She does a great job of explaining these provisions in clear and understandable language.

The program will be administered by the Department of Housing and Urban Development, and was designed after a Pennsylvania state program which has provided 41,500 homeowners with $433 million in aid since 1984.

The legislation calls for the program to be fully implemented by October 1, 2010.

Read more about the program here and here.

John Corcoran is an Associate with Plastiras & Terrizzi law firm in San Rafael, California (Marin County).  He advises clients on real estate matters, small business issues, estate planning, and general civil litigation.  He may be reached at [email protected] or (415) 472-8100 x211.