HUD Approves Maryland's $40 Million Emergency Home Loan Program

Maryland is ready to take applications immediately

WASHINGTON — U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan on Friday approved the State of Maryland’s bid to administer HUD’s Emergency Homeowner Loan Program (EHLP), a bridge loan program designed to help unemployed families pay their mortgages. HUD determined Maryland’s Department of Housing and Community Development’s mortgage bridge loan program is “substantially similar” to HUD’s program, thereby allowing the State to begin implementing the program itself.

Late last year, HUD awarded $1 billion to 32 states and Puerto Rico, including $40 million to the State of Maryland, to provide emergency assistance to homeowners at risk of foreclosure due to a substantial reduction in income brought on by layoff, underemployment, or a medical condition. With today’s approval, Maryland will begin to take applications immediately. Interested homeowners should call the Maryland HOPE Hotline at 877-462-7555 to find a housing counselor near them for free counseling and assistance.

EHLP was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The law authorized HUD’s Secretary to allow funds to be administered by states that have an existing program that provides substantially similar assistance to homeowners. HUD found Maryland is administering an equivalent program and the grant funds may be used for reasonable administrative costs and to provide EHLP loans to homeowners in the state.

HUD’s Emergency Home Loan Program will work through a variety of state and non-profit entities and will offer a declining balance, deferred payment “bridge loan” (zero percent interest, non-recourse, subordinate loan) for up to $50,000 to assist eligible borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes and hazard insurance for up to 24 months.

Under the program, eligible borrowers must:

— Be at least three months delinquent in their payments and have a reasonable likelihood of being able to resume repayment of their mortgage payments and related housing expenses within two years;

— Have a mortgage property that is the principal residence of the borrower, and eligible borrowers may not own a second home; and

— Demonstrate a good payment record prior to the event that produced the reduction of income.

HUD determined that 27 states will use the delegated approach to program administration. Under this approach, HUD will delegate key program administration functions to an experienced and highly regarded national network of affiliated housing counseling agencies. Under the program, nonprofit housing counselors who are part of the National Foreclosure Mitigation Counseling Program administered by NeighborWorks® America will coordinate intake counseling, document preparation and outreach functions. HUD will also use it delegation authority to contract with an experienced entity to provide loan servicing and fiscal control functions such as collecting payments from homeowners, distributing payments to servicers, and managing loan balances.

HUD will announce additional details and program specifics for the delegated approach states when NeighborWorks® America launches the program in the coming weeks.

Source: U.S. Department of Housing and Urban Development (HUD)

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