October 5, HUD released information about the $1 billion Emergency Homeowners Loan Program (EHLP) authorized in the Dodd-Frank financial reform bill, including a program description and formula allocations for the 32 eligible states and Puerto Rico. Click here to view this information.

EHLP, which is expected to become operational by the end of the year, will offer declining balance, deferred payment, non-recourse, subordinate loans with zero interest for up to $50,000 to assist eligible homeowners, including manufactured home owners. EHLP loans will be used to assist eligible borrowers with payments of arrearages, including delinquent taxes and insurance, plus up to 24 months of monthly payments on their mortgage principal, interest, mortgage insurance premiums, taxes, and hazard insurance.

To be eligible for the program, a homeowner must:

• Have had a total household income equal to, or less than, 120 percent of the area median income (AMI) before the onset of unemployment, underemployment, or medical emergency (the event);
• Have a gross income that is at least 15 percent lower than the pre-event income;
• Be at least three months delinquent on payments and have received notification of intention to foreclose;
• Have a reasonable likelihood of being able to resume repayment of the first mortgage obligations within two years; and
• Reside in the property as their principal residence.

The funds which have been allocated to states by a formula will be administered by State Housing Finance Agencies (HFAs) or qualified third parties. In states where HUD determines the HFA does not administer a program substantially similar to EHLP, the program will be administered by a national intermediary. HUD says it plans to enter into a cooperative agreement with NeighborWorks America to have its network of housing counselors provide homeowner intake services. HUD will also contract with an entity which has extensive loan servicing and fund control capabilities to provide general accounting and fiscal control services. Once the note/mortgage is placed and the homeowner’s final balance is determined, the loan servicing function will be transferred to the Federal Housing Administration (FHA).

HUD’s formula allocations are based on each state’s approximate share of unemployed homeowners with a mortgage relative to all unemployed homeowners with a mortgage. HUD will identify areas in each state that have suffered from the most recent spikes in unemployment and/or mortgage delinquencies and will encourage the use of EHLP funds in these areas.

More information on the program, including state allocation amounts, can be found in HUD’s program summary by clicking here.

For more information, MHI members can contact MHI Vice President of Regulatory Affairs Lois Starkey at lstarkey@mfghome.org.