It's here! Unemployed homeowners can now receive loans that will help them avoid foreclosure, thanks to a new program by the Obama administration.
After delays and efforts to terminate the program, the $1 billion Emergency Homeowners' Loan Program–established when the Dodd-Frank financial overhaul bill was enacted in the summer of 2010–is now ready to help unemployed homeowners to continue to make their mortgage payments.
The program will allow qualified unemployed homeowners to receive zero-interest loans of up to $50,000 and for up to two years. The loan can be forgiven if the homeowner stay in the house five years. Requirements include being at least three months behind on your payments but also having a reasonable ability to resume payments within the two-year period. Additionally, homeowners have to have had a 15% decrease in income. However, they must have been able to pay for their mortgage prior to the income drop. They can't own a second home and the property has to be their primary residence.
Included in this latest emergency relief effort are: Pennsylvania ($106 million), Maryland ($40 million), Connecticut ($33 million), Idaho ($13 million), and Delaware ($6 million).
Coming soon, nonprofit NeighborWorks America, is providing federal funding for loans in 27 other states that don't have a similar program. The Department of Housing and Urban Development expects some 30,000 homeowners to participate.
Other states such as California, Nevada, Michigan, and a few more are expecting to receive some aid through the Treasury Department, which has allotted $7.6 billion in assistance for hard-hit states.
Meanwhile, housing-market analysts are saying that for long-term real estate recovery to occur, live-in homebuyers are necessary. Experts acknowledge that markets such as Phoenix, Arizona were propped up by very low interest rates, investor demand, and some of the most affordable home prices ever seen.
But experts say that buyers who are purchasing to live in the home will help stimulate the housing recovery process. In some markets, like Phoenix, it's been a 50-50 split between live-ins and investors.
Some of the factors holding back traditional buyers from dominating the market are, of course, stricter requirements for lending, unemployment, or lack of sufficient work, and uncertain financial times.
Live-in homebuyers tend to come from one of two groups: first-time or move-up buyers. With the recent marketplace and economic conditions being so unstable, and a decline in home value, the move-up buyers have not been very active. But some real estate experts are seeing an emergence of a new buyer group: lower-income residents. This group can now afford to buy because the home prices, in some areas, have declined significantly. However, in many areas, home investors are vying for those same properties, creating competition.
In a perhaps surprising move, some home auctions, where investors can typically scoop up a great deal, are now excluding investors. A California-based firm is helping to get rid of all foreclosed Arizona homes for which the previous owners had U.S. Federal Housing Administration-backed loans. The U.S. Department of Housing and Urban Development's policy gives traditional buyers at least 30 days to bid on new listings first. Then the properties may be opened up to investors. Homes in the Phoenix area are being sold online at HudHomeStore.com.
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