Federal mortgage program for unemployed said to only spend half of its funds

The federal government's Emergency Homeowners' Loan Program is expected to only spend half of the $1 billion fund at its disposal to help unemployed homeowners pay their mortgages because so few people actually met the strict criteria to qualify for the financial assistance. The department of Housing and Urban Department anticipates only approving 10,000 to 15,000 homeowner applications, a small fraction of the 100,000 borrowers who applied for the program.

CNN Money reported that those who do qualify for the financial aid will receive between $35,000 and $45,000. The program was expected to target a specific population of delinquent homeowners who are not being helped by other federal housing initiatives such as mortgage modification programs. The program offers interest-free, forgivable loans to homeowners who have lost at least 15 percent of their income due to the economy or a medical condition. The homeowners must be at least 90 days delinquent, facing foreclosure and have evidence proving they can resume their mortgage payments once they become employed again.

The program began to experience delays once the strict requirements were set into place, the news source reported. The initial launch of the program was delayed, causing a shortened time period for homeowners to apply. In addition, HUD used a complicated formula to decide who would receive assistance based on income and delinquency guidelines, factoring in monthly payments, income and arrears, which knocked out many eligible homeowners from receiving aid.

In an interview with The New York Times, Massachusetts Democrat Representative Barney Frank, author of the program, said the failure of the program was the result of poor administration and the department's late start in implementing the plan. In addition, John Dodds, director o the Philadelphia Unemployment Project, told the news source, HUD could have eliminated some of the stricter requirements that were preventing many homeowners from qualifying for the aid once it became apparent that the program was not reaching enough borrowers.

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