Interest-free federal loans offered to unemployed homeowners

By Jenifer B. McKim, Globe Staff

A long-delayed federal program aimed at helping hundreds of unemployed Massachusetts homeowners pay their mortgages is finally being launched today, with $61 million earmarked for the state.

The US Department of Housing and Urban Development and the nonprofit NeighborWorks America said the program will provide hundreds of local borrowers with interest-free loans of up to $50,000 over a two-year period. In some cases, the money will not have to be paid back.

The $1 billion national program is expected to benefit 30,000 unemployed homeowners in 27 states and Puerto Rico with financial assistance.

Homeowners must file loan applications by July 22, said Eileen M. Fitzgerald, chief executive of NeighborWorks America, a Washington, DC-based nonprofit housing advocacy group. “NeighborWorks America knows all too well that in these tough economic times, homeowners facing foreclosure are seeking help wherever they can find it.”

The loan program, approved by Congress last summer, was supposed to be up and running by the end of 2010, but various complications slowed its start date.

Interested homeowners must submit a pre-application, which could go into a lottery if there is excessive demand, officials said. To qualify, homeowners must have suffered a drop in income of at least 15 percent due to job loss, wage cuts or a health emergency.

Interested homeowners can visit www.FindEHLP.org, to get an application and more information, or call 855-346-3345.

Local agencies, including Urban Edge Housing Corp. and Nuestra Comunidad Development Corp. in Roxbury, also will be working with homeowners to help them through the process.