The new financial reform law includes a provision that is specifically designed to provide relief to homeowners who have lost their jobs. We get this from a recent MarketWatch piece on the subject:
More help is on the way for unemployed homeowners struggling to make their mortgage payments, thanks to funding tucked into the financial reform legislation signed by President Obama on Wednesday.
Although the U.S. Department of Housing and Urban Development hasn’t released the details of exactly how the $1 billion emergency homeowners’ relief fund will be distributed, legislation dictates that the program start by Oct. 1.
HUD is reviewing the language to determine the best method of implementation, said Lemar C. Wooley, a HUD spokesman.
The bill also includes $1 billion for redevelopment of abandoned and foreclosed homes.
The relief-fund program is similar to a Pennsylvania program that provides financial assistance to out-of-work homeowners so they can keep up with their housing costs, said John Dodds, director of the Philadelphia Unemployment Project. The money has been available to residents since the 1983 recession, he said. …
Currently, unemployed homeowners are granted at least three months’ forbearance on their mortgage loans through the Home Affordable Unemployment Program. Some states hardest hit by the foreclosure crisis received extra federal funds for foreclosure prevention, and some states offer assistance for unemployed homeowners.
But the new funding in the bank-reform bill extends help for unemployed homeowners to all parts of the country.
“In this economy, getting that next job hasn’t been a very quick thing,” said Julia Gordon, senior policy counsel for the Center for Responsible Lending. For many, a three-month forbearance period isn’t enough, she said.
“For the most part, these are people whose loans are sound, 30-year fixed-rate loans. The person is in a bad situation because they’re underwater in terms of equity and they can’t make payments. They can’t borrow against their house and in many cases can’t sell their house,” Gordon said of the new group of homeowners who could be helped. “We don’t know how many people are paid for with a billion dollars, but it is a great start.”
