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.

Two States which are in desperate need of government mortgage help are Michigan and Illinois. In 2010, 221,000 households in Michigan foreclosed on their homes. On average, one in every 282 housing units received a foreclosure filing. Some Michigan counties, such as Genesee, were hit even harder, with rates of 1 in every 162 homes receiving a foreclosure filing. Illinois is not doing much better. In 2010, 194,520 households lost their homes to foreclosure. County Cook, for example, had 8,117 new foreclosures in December 2010 alone.

This article will look at some of the main government mortgage help and assistance programs for Michigan and Illinois.

Michigan Government Mortgage Assistance

Legal Aid: Free local legal aid programs such as Legal Assistance Center in Grand Rapids (Tel. (616) 454-9493), the Legal Hotline for Older Michigan Citizens, (800) 347-5297, and the Western Michigan Legal Services (Toll Free:(800) 442-2777) provide low-income homeowners with legal help.

Michigan Foreclosure Prevention Program

The Michigan Foreclosure Prevention program is another legal aid program available to Michigan residents. The program is a partnership between the National Consumer Law Center and legal aid and housing counselors throughout the state of Michigan.

Southeast Michigan Regional Foreclosure Intervention and Neighborhood Stabilization Collaborative.

This program is a cooperative effort between the counties of Southeast Michigan, which provides access to foreclosure protection resources to southeast Michigan residents. For instance, residents of Oakland County can benefit from the Oakland County Foreclosure Prevention Initiative. This program provides struggling homeowners with a personalized foreclosure status assessment and a housing counselor free of charge. The program will contact your lender, negotiate terms and if successful reach a settlement with your lender.

Illinois Government Mortgage Assistance

Foreclosure is a lose-lose situation for lenders and borrowers. Avoiding foreclosure is often in the best interest of everyone. Unfortunately a lack of education and understanding of the foreclosure process causes many homeowners to give up on their homes without a fight. The state of Illinois offers education and counseling to homeowners facing foreclosure through the Illinois Association of Community Action Agencies. The IACAC provides several housing initiatives to help those who are facing or have already suffered the effects of a foreclosure. These include the IDHS Service Provider Technical Assistance, the Rental Housing Support Program and the Illinois Community Action Development Corporation.

If you are a resident of Illinois or Michigan and need mortgage assistance, act now. Help is available, but the longer you wait the less foreclosure avoidance options are open to you.

Wells Fargo offers existing customers help applying for a loan modification.

With over 8.5 million workers losing their job in 2010 and over 7 million homes at risk of foreclosure, you are in good company if you are struggling to pay your mortgage payments. Wells Fargo and other banks know this and have designed loss mitigation programs to help you get on track with your mortgage payments and avoid foreclosing on your home.

If you own a mortgage, the odds are it is with Wells Fargo. One in every six mortgages are managed by Wells Fargo. Wells Fargo’s loan modification figures are not bad, which is encouraging if you are struggling to make ends meet and own a Wells Fargo mortgage. In 2010, less than 2 percent of Wells Fargo’s mortgage ended in foreclosure and delinquency and foreclosure rates were a 25 percent lower than the of the banking industry’s average.

There are three main programs you can apply for if you are an existing Wells Fargo customer and would like to improve your mortgage terms: The Refinance Program, the Repayment Plan and the Loan Modification Program. Whether you simply want to take advantage of lower interest rates or are on the brink of losing your home, there is a program for you.

Our previous article in this series dealt with Wells Fargo’s Refinance Program for Existing Customers. In this article we will look into Wells Fargo’s Loan Modification program. This program is designed to lower your monthly mortgage payments by giving you a better deal on your interest rate, the length of your mortgage (for instance, reducing your term from 30 to 20 years) or in some cases (rarely) by reducing the balance on your loan.

Loan Modification

Wells Fargo is an agent for the Obama’s Administration Home Affordable Modification Program (HAMP) and also provides in-house modification programs. You can apply for a Wells Fargo loan modification program here. You will need to supply the last four digits of your Social Security Number, your current loan’s number and your property ZIP Code books. There are several programs you might be eligible for, so Wells Fargo have prepared a questionnaire you can fill in. Once you finish filling in the form, Wells Fargo will decide what programs you are eligible for (if any). To help you collect the necessary information and explain the bank’s requirements, Wells Fargo has prepared a financial worksheet you can download and fill in. Click here to download Wells Fargo’s financial worksheet.

The Federal Government has put in place a number of programs designed to help homeowners avoid foreclosure (HAFA, HOPE, HFA) on a federal level and has also provided individual states with broad latitude to fine tune aid to what their citizens need.

Lisa Madigan, the AG of Illinois, is focusing on providing Illinois citizens at risk of losing their home with practical information to help them help themselves. She recommends a three step process troubled borrowers should follow to improve their chances of keeping their home: 1) Gather Information, 2) Develop a Plan, and 3) Present the Plan. Let us review what this three stage process entails.

If you are going through financial difficulties and are at risk of losing your home you are going to have to work hard to have a chance of saving your home. It is a good idea to view the work involved in avoiding foreclosure as your job; a job with excellent wages and benefits: a home for you and your family.

Gathering Information.

Organizing yourself and knowing where you stand is probably the most important single step you can take to save your home. It will give you a clear picture of your situation and provide you with the arguments to present a solid case to your lenders. This information will also be useful for legitimate financial counselors when they assess your case.

1.)    General Information.

What kind of information will you need to provide?

Your will need:

a)      Your current mortgage payment.

b)      Property taxes and homeowners insurance.

c)       The date of the last payment you made (make sure you know what month the payment was for)

d)      The number of months you are behind.

e)      All court papers and notices you have received.

f)       Details on your loan: type of rate (fixed or variable), current interest rate (5%, 7%…), size ($100,000, $500,000…), length (10, 20, 30 years)

g)      If your loan is an adjusted rate loan (ARM) when will the mortgage rate reset?

Once you have this information you will have a more realistic view of your financial situation. Some homeowners are so scared about the possibility of losing their home they choose to ignore their situation and stick their head in the sand and pretend nothing is wrong until it is too late.

With this information you can now go on to the next stage of gathering information: creating a budget.

2) Creating a budget.

Sit down and work out what your income is. Lenders will be very interested in this when they work out what payments you are able to make if they refinance or modify your loan.

Write a report on your jobs and sources of income; make sure you include the time you have been employed, the consistency of the income, your gross and net income, government benefits, and any child support. Provide evidence for every source of income.

List all your expenses. It is common to underestimate monthly expenses; be thorough and try to provide bank statements to back you claims. Include what you spend every month on food, utilities, clothing, insurance, medical expenses, transportation, pet expenses, charity, student loans, child care…

At this point you should revise your budget and make sure you have documentation that supports your claims. Make sure you include recent mortgage statements, the last two months’ pay stubs for every working household member, tax returns for the last two years, bank statements for at least two months, and your current utility bills.

After working hard gathering all this information you are now ready for the last step of this step: Writing your hardship letter.