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.)
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.)
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.
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.
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.)
Here are some helpful tips for managing your EHLP loan:
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.