The Dodd-Frank Wall Street Reform and Consumer Protection Act provided $1 billion to the U.S Department of Housing and Urban Development (HUD) to set up the Emergency Homeowners' Loan Program (EHLP). While the deadline to apply to this program has passed, read on to find out how to manage your EHLP loan if you have already been approved, as well as general information about the program.
(There are other programs for struggling homeowners for which you can still apply. See our Government Foreclosure Prevention Programs topic area.)
Overview of the Emergency Homeowners’ Loan Program (EHLP)
The EHLP provides assistance to homeowners who experienced a reduction in income and faced foreclosure due to involuntary unemployment, involuntary underemployment, or a medical emergency. The program was designed to complement the Hardest Hit Fund (HFF) by serving the states that were not covered under the HHF. (The HHF is a federally funded foreclosure prevention program that may be able to help you with your mortgage difficulties if you live in one of the designated states. You can learn more in Nolo's article The Hardest Hit Fund.)
Eligibility for EHLP
EHLP was designed for homeowners who experienced a reduction in income due to unemployment (or underemployment) leading them to fall behind in mortgage payments and face imminent foreclosure. To receive a loan under this program, the homeowner must have had a reasonable likelihood of being able to afford and resume payment obligations when re-employed.
Relief Provided to Homeowners Under EHLP
The EHLP provides mortgage payment relief to eligible homeowners by covering past-due mortgage arrearages, as well as paying a portion of the homeowner’s mortgage payments for up to 24 months (up to $50,000 maximum).
After a homeowner is approved for an EHLP loan, HUD makes monthly emergency mortgage assistance payments directly to the homeowner’s mortgage servicer. Each month, the homeowner is required to contribute a minimum payment towards the mortgage payment (called a “Homeowner Contribution Payment”), which is 31% of the homeowner's monthly income. EHLP assistance covers the remaining mortgage amount, for up to 24 months.
Will You Have to Pay Back your EHLP Loan?
If you meet certain conditions, you won't have to pay back your EHLP loan. ELHP mortgage assistance is a 0% interest, forgivable loan. There is a Five-Year Principal Reduction Period during which time the homeowner does not need to make payments on the EHLP loan and the outstanding principal is reduced by 20% each year -- so long as the homeowner remains current on the mortgage payments and remains in the home. This means the outstanding balance of the EHLP loan will be reduced to $0 in five years after the EHLP assistance ends if you remain current on your mortgage payments. (If you fall behind with your mortgage payments or sell your home during the five-year forgiveness period, you have to pay back the remaining balance on the EHLP loan.)
Managing Your EHLP Loan
Here are some helpful tips for managing your EHLP loan:
- Remember to make your Homeowner Contribution Payment by the 15th each month. The payment must be received (not postmarked) by the 15th. If the payment is late, you risk suspension or possible termination of your emergency mortgage assistance.
- How to make your payments. Each month an EHLP payment coupon, along with an EHLP mortgage statement, will be mailed to you. You must send the payment to the address shown in the EHLP statement.
- Seek a Hardship Waiver if your income is too low to make a payment. If your income drops, you may be eligible for a payment reduction if you participate in additional financial counseling with your housing counseling agency and meet certain other criteria, such as your unemployment benefits have expired or you have out-of-pocket medical expenses of at least $125 for three or more consecutive months. Homeowners that are approved for a waiver may have their Homeowner Contribution Payment reduced to $25 or 31% of their current monthly income, whichever is greater.
- You must report income increases. If your income increases above the amount listed in your HUD EHLP Loan Description Acknowledgment for at least three consecutive months, you need to inform your EHLP counseling agency. (Income increases lasting more than three consecutive months must be reported before the next Homeowner Contribution Payment is due.)
- Pay your real estate taxes and hazard insurance. If your real estate taxes and hazard insurance are not escrowed as part of your mortgage, you must continue to pay these fees outside of the program.
- Complete the Annual Recertification requirement. If your EHLP loan exceeds 12 months, you must re-certify that you continue to meet program eligibility requirements to keep receiving mortgage payment assistance. The certification must occur in the 11th or 12th month of your assistance period. Your counseling agency will contact you during the 11th month to schedule a recertification appointment.
Information for Approved EHLP Borrowers
If you have been approved for an EHLP loan, look at your EHLP loan documents to find out the amount of payments and time period of assistance. Also, if you want to learn more about your EHLP loan, read the publication Managing Your EHLP Loan. For general questions about your EHLP loan, send an email to firstname.lastname@example.org or call 202-220-7099.