A federal program to help unemployed homeowners avoid foreclosure has come to a disappointing end with less than half of its $1 billion spent and two-thirds of its anticipated recipients receiving nothing.
The Emergency Homeowners' Loan Program, which grew out of Wall Street reform legislation, was to provide forgivable HUD loans for an estimated 30,000 struggling homeowners beginning in 2010. The deadline to commit the funds was Sept. 30.
According to USA Today, the program shut down having conditionally committed just $432 million in loans to 11,832 of the more than 100,000 applicants in 32 states and Puerto Rico, with the average loan ranging from $35,000 to $45,000. The loans will be forgiven if the recipients remain in their home for five years.
The unspent $568 million will be returned to the U.S. Treasury.
So what was the problem? In a word: bureaucracy. It took HUD nearly a year to begin accepting applications last June from folks facing foreclosure.
Lewis Finfer, executive director of the Massachusetts Communities Action Network that worked to pass the enabling legislation, called it "sad and shameful" that HUD wasn't able to meet the need before the program expired. He says HUD made matters worse by not advertising the program and adding on additional eligibility requirements.
In a statement before Congress last week, Carol Galante, HUD's acting assistant secretary for housing, admitted that it "took longer than anticipated" to set up the foreclosure aid program and that the eligibility requirements as defined by law disqualified more applicants than anticipated.
Just wondering: Now that HUD finally has its act together, will someone – anyone – in Congress show some spine and suggest an extension to this program?
Or will Congress simply turn its back while more American homeowners sink into foreclosure?
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