No-interest loans offered to jobless homeowners
Unemployed homeowners in Massachusetts will be able to take out interest-free loans of up to $50,000 to help them make mortgage payments, under a $1 billion federal program unveiled today in Roxbury by the US Department of Housing and Urban Development.
The program will provide about $61 million to struggling property owners in the state, according to HUD Secretary Shaun Donovan.
"Countless people who have lost their jobs through no fault of their own temporarily lack the steady income they need to pay their mortgage,'' Donovan said in prepared remarks. "That's why the Emergency Homeowner Loan Program will provide limited and targeted assistance to working families."
The effort, called the Emergency Homeowner Loan Program, is meant to supplement a $7.6 billion program launched by the US Treasury Department earlier this year to help jobless homeowners in 18 states and the District of Columbia, which were hardest hit by the recession. The Treasury program also targets homeowners who are "underwater," meaning they owe more on their mortgages than their properties are worth.
The new program expands assistance to 32 states, as well as Puerto Rico, that were not included in the Treasury program. To qualify for loans of up to two years, borrowers must have suffered a significant drop in income and be at least three months behind on mortgage payments. They also must demonstrate "a reasonable likelihood of being able to resume" payments within two years. Applications will be accepted until the end of the year.
The news was lauded by local housing advocates who have long pushed for government assistance for unemployed homeowners in Massachusetts, where the unemployment rate is 8.8 percent, compared with 9.6 percent nationally.
Lew Finfer, executive director of the nonprofit Massachusetts Community Action Network, said long-term unemployment has become the main cause of foreclosures, which are continuing to mount in the state. During the first eight months of the year, 9,887 Massachusetts homeowners lost their properties to foreclosure — surpassing the 9,269 completed foreclosures recorded during all of last year, according to the Warren Group, a Boston company that tracks local real estate.
"These homeowners face unemployment largely due to the recession that was largely caused by speculation by big banks and Wall Street investment companies,'' Finfer said. "Preventing foreclosures helps homeowners, helps lessen neighborhood deterioration and declining property values."
Donovan spoke along with Congressman Barney Frank, a Newton Democrat, during a press conference at the Urban Edge Community Development Corp., a Roxbury nonprofit.