Underwater and unemployed homeowners who are facing financial distress may have options outside of traditional foreclosure prevention efforts, like home loan modifications, as programs like the Hardest Hit Fund or the Emergency Homeowner Loan Program are being implemented to help homeowners who may be suffering from negative equity or financial distress related to the loss of their job. Understandably, underwater home loans and unemployment are two of the major causes that have lead to troubles in the housing market and solutions that have been presented over the past months have assisted some individuals with finding more affordability, there are still issues that need to be addressed.
Obviously, homeowners who may be suffering from unemployment, particularly, have few options when it comes to avoiding the loss of their home as their income may be limited or nonexistent, which would obviously disqualify these individuals from most forms of assistance. While homeowners who are unemployed may be offered a forbearance on their mortgage payments for a set period of time through the Unemployment Program extension within HAMP, homeowners who simply have no income will obviously be unable to meet a mortgage payment even if it is reduced through a modification. Yet, these initiatives like the EHLP and the HHF may offer either loans or other forms of monetary assistance that can be used to make a homeowner’s payment while they are unemployed.
These programs are set to keep homeowners in their home while they continue to look for work in cases where extended unemployment has been problematic and the result of widespread foreclosures in certain areas. Some of these loans that may be offered to homeowners will be at 0% interest and may be forgiven if certain conditions are met, which could obviously help numerous men and women who have had trouble seeking an employment opportunity that will allow them to either qualify for a modification plan or continue making their mortgage payments.
Yet, certain areas of these programs may also address underwater home loan issues as they could provide relief through either principal forgiveness or, in certain cases, homeowners may receive assistance to pay the difference on their principle and their home’s current market value. Understandably, there are homeowners who have grown frustrated with being in an underwater mortgage situation and it’s hoped that programs if like the Emergency Homeowner Loan Program and the Hardest Hit Fund can offer financial assistance to distressed homeowners, or at least keep homeowners from walking away when they feel that their underwater mortgage situation is hopeless.
While the Hardest Hit Fund is only available in certain states, it’s hoped that the Emergency Homeowner Loan Program will be available in the coming weeks as the Department of Housing and Urban Development continue to develop this plan in hopes of avoiding more foreclosures for homeowners who are particularly distressed and unable to meet their mortgage payment obligation.