Have you heard about the new federal mortgage help program? We are talking about the Emergency Homeowners’ Loan Program (EHLP) managed by HUD. Although this program is still in the development stages, it could prove to be such a huge help for borrowers we feel you should know what information HUD has provided up to now about this exciting new program.

Goal

The goal of the Emergency Homeowners’ Loan Program is to to help homeowners who are struggling to pay their mortgages due to a drop in their income of at least 15 percent because of unemployment or underemployment due to no fault of their own. This means that unemployed workers who were laid off due to lack of work or whose hours were reduced may receive help with their mortgage payments.

How Will The Program Work?

The main tool the EHLP will use to assist homeowners is to grant eligible homeowners with a bridge loan of up to $50,000 to pay for up to 24 months of monthly payments, as well as delinquent mortgage, tax and insurance payments.

Under this program, borrowers must use 31 percent of their income to pay for their mortgage and the EHLP will pay the balance. However, the minimum payment for any homeowner is $25. The program will cover for arrearages and monthly payments for up to 24 months or until the loan reaches $50,000, whatever happens first.

Repayment

The beauty of this program is you do not have to repay the 5-year term loan, just as long as you regularly pay your monthly mortgage payments. Every year the balance of the loan drops by 20 percent, so by the end of the five years the balance will be extinguished if the borrower has followed the mortgage payments schedule.

Which States Will Qualify?

The EHLP program will be exclusive for states with a high unemployment who are not benefiting from funds by the Treasury’s Innovation Fund for Hardest Hit Housing Markets. This includes the following 32 states:

Alaska

Arkansas

Colorado

Connecticut

Delaware

Hawaii

Idaho

Iowa

Kansas

Louisiana

Maine

Maryland

Massachusetts

Minnesota

Missouri

Montana

Nebraska

New Hampshire

Mexico

New York

North Dakota

Oklahoma

Pennsylvania

Puerto Rico

South Dakota

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

Eligibility

The next article will look into the eligibility criteria of the EHLP program as specified by HUD. Notice that this program is still in development and the program’s terms could change at any moment.

Chase offers its clients a private Loan Modification Program

This series of articles looks at loan modification programs and the steps you must take to qualify. To make this guide more relevant and practical we look at CHASE’s loan modification program as an example.

Any loan modification, whether offered by a lender or sponsored by the government has four main stages:

1.) The initial conversation with a loss mitigation agent.

2.) The eligibility review.

3.) The trial period plan.

4.) The final agreement.

This article will look at stage 1: The Initial Conversation, explain what it entails and provide practical advice on how to present yourself in the most positive light possible.

When you call or visit your bank (CHASE in this example) the agent you speak with will ask for information on your case to assess your situation. This does not mean you need to have all your documentation ready before you talk to your bank, you can prepare that later. However, you will be asked some basic questions in your initial conversation with a loss mitigation agent about your situation, and you will need to be able to answer those questions to get your application moving.

The first question you will be asked is why are you struggling to pay your mortgage. To qualify for a loan modification there must be a specific financial hardship that is undermining your ability to make your mortgage payments. Hardships that can qualify you for a loan modification include medical emergencies, a divorce, loss of employment or a reduced income.

The next question is how far behind you are in your payments. If you are too far behind the bank may decide you are a lost cause and decide investing in your loan is not worth their time. Remember banks offer loan modifications to clients because foreclosure are more expensive than loan modifications. However, clients who apply for a loan modification and end up foreclosing on their mortgage anyway are more expensive than straight foreclosures. Banks therefore try to filter lost cases and focus their attention on borrowers who will be able to remain current on their mortgage with a loan modification. The key is to contact your bank as soon as possible when you face financial difficulties that jeopardize your ability to pay your mortgage. The sooner you talk to your bank the more options you will have.

So what do you need for your initial conversation? Be prepared. Although you don’t need all your documentation, basic information like proof of income, tax records, the reason for your financial hardship and the number of months your mortgage is overdue will help your loan modification application progress faster.

Our next article will look into the second step of your loan modification: The Eligibility Review.

Times are not easy for Michigan homeowners, as in the rest of the U.S. thousands of homeowners are facing the possibility of losing their homes to a foreclosure. From January to May 2010 alone, there have been 74,475 foreclosure filings and 9,703 foreclosure sales in Michigan. However, there is hope for those that are willing to fight for their home. Even when a homeowner simply cannot afford their home; there are alternatives to foreclosure if you take advantage of federal and state mortgage help programs.

Michigan foreclosure law has changes in the last two years to adapt to the rise in foreclosures. For instance, since July 5, 2009, state law requires lenders to work with you (and all other troubled borrowers) to avoid a foreclosure. There are also specialized government and non-governmental mortgage aid programs that focus on providing help to Michigan troubled homeowners. These include the Department of Housing and Urban Development section for Michigan, the Michigan Foreclosure Prevention Project, the Michigan Attorney General Office and the Foreclosure Intervention and Neighborhood Stabilization Collaborative.

All of these organizations agree that when your lender starts foreclosure proceedings you must immediately contact a free housing counselor or an attorney. In some cases you might even want both.

A housing counselor will help you understand the foreclosure process in Michigan and provide you with a list of mortgage workouts available to you. They will also help you communicate with your lender and collect all the information you need to negotiate a mortgage workout with your lender. The good news is that housing counselors are free. Contact counselors federally approved by the Housing and Urban Development by calling  800-569-4287 or visit www.HUD.gov. Or visit a state approved counselor by calling 866-946-7492 or visiting www.michigan.gov/mshda.  You can also contact the Michigan Foreclosure Prevention Project (http://miforeclosure.mplp.org), an organization that combines the services of legal aid offices and housing counselors throughout Michigan, as well s the Legal Services of South Central Michigan (LSSCM) and the University of Michigan Law School.

A foreclosure starts a legal process which will end in you losing your home if you don’t take steps to avoid this from happening. Foreclosure and bankruptcy attorneys have experience in dealing with debt problems, and can help you negotiate with lenders. If you cannot afford a lawyer you can find legal aid at www.michbar.org/public_resources/legalaid.cfm. They can provide you with a list of lawyers that do pro bono work (free or for reduced fees) for low income borrowers.

Contacting government and state approved agencies will protect you from so-called foreclosure prevention specialists which are often scam artists that prey on vulnerable borrowers. Remember there is no need to pay for a housing counselor, help is available for free.

Finding a housing counselor and an attorney is only the beginning, to avoid foreclosure you are going to have to contact your lender and negotiate a mortgage workout. Our next article Avoid Foreclosure Michigan: Contact Your Lender and Negotiate will look into further steps Michigan homeowners must take to protect their homes.

If you are a resident in Georgia and are struggling to meet your mortgage payments you are at risk of losing your home. The Georgia Department of Community Affairs provides valuable advice on how to avoid foreclosure and find free help from professional housing counselors.

Every state has different laws on foreclosure process, so it is important to know your state laws. Local housing counselors can provide you with this and other important information. Georgia, for instance, is a nonjudicial state in foreclosure matters. This means that a lender does not have to go to court to start a foreclosure. Nevertheless the borrower must be at least 90 days (three months) behind on his payments. Also, the lender or a representative must advertise the date of the foreclosure for 30 days in a legal publication of your county.

How can housing counselors help?

Knowing what to do is not easy when you are worried you might lose your home. A certified counselor can help you ask for help in the right way to the right people. Counselors have lists of contacts for key people in the main lending companies. These are decision makers that have the authority to negotiate the terms of a mortgage workout. A counseling agency can also help you to write a financial hardship letter asking for a mortgage workout. Just writing this letter and filling legal forms can be a nightmare for some people. Free counseling agencies can help you with this at no cost to you.

Counseling agencies can also help you find out what alternatives you have in your specific circumstances. For instance, if you just lost your job you might be tempted to ignore your mortgage payments until you find a job. However, a housing counseling agency can help you ask your lender to reduce or stop payments until you have a job again. These choices might not be available if you wait too long without either contacting a housing counselor or your lender. Just remember that a housing counselor is paid to have your best interest at heart, and a bank does not.

Can counseling agencies give me funds to help me meet my late payments?

Although the government funding that pays for counseling agencies does not allow them to use these funds to provide direct financial aid, but they can put you in touch with others that can. Talk to your local housing counseling agency and ask what programs (government and private) are available to help you bring a mortgage current or pay for other expenses.

Even if you feel there is no chance of you keeping your home and foreclosure is unavoidable, you should still contact a housing counselor. They can explain to you how the Homeowner Affordability and Stability Plan can help you find alternatives to foreclosure.

Click here for a list of counseling agencies approved by the Georgia Department of Community of affairs or call 1-888-995-4673 to find your closest HUD approved agency.