Aimed at helping US home owners who defaulted on their mortgages due to job loss or unexpected medical bills, the Department of Housing and Urban Development (HUD) recently launched a US$1 billion Emergency Homeowners’ Loan Program (EHLP).
The programme targets approximately 1.8 million home owners facing foreclosure. The EHLP was supposed to commence last year but implementation delays mean that the HUD must spend all its US$1 billion by the end of the federal government’s fiscal year on 30 September.
That gives home owners in 27 states, including Virginia, until 22 July to complete their applications. If demand outnumbers available funds, the department will randomly select successful applicants.
Meanwhile, five additional states, including Maryland, are governed by slightly different rules, which provide them more time to use the funds, because they began accepting EHLP applications earlier, under similar state-run programmes.
Maryland has pledged US$4.2 million in EHLP loans to 121 home owners, according to Clarence Snuggs, Deputy Secretary of Maryland Department of Housing and Community Development. He added that the department will work until the last minute to spend the US$40 million that the state has been allocated under the EHLP.
Through the programme, HUD hopes to help 30,000 home owners nationwide, including 1,223 in Virginia and 1,120 in Maryland, which received US$46.6 million in funding.
Harry Sewell, Executive Director of the D.C. Housing Finance Agency, said that the District hopes to assist up to 1,000 home owners under a separate programme.
However, not everyone is in favour of the merits of programmes, especially during lean fiscal times.
“The best foreclosure mitigation programme in America is a job. It’s not a government check, it’s a pay check,” said Rep. Jeb Hensarling. In February, Hensarling proposed a bill to stop the EHLP, calling the programme “an act of fiscal child abuse.”
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