Briefing: Foreclosure Prevention
Thanks to the Frank-Dodd Wall Street Reform and Consumer Protection act, $1 billion is now available to help suppress the national foreclosure crisis.
The program makes up to $50,000 in “bridge loans” available to residents who are facing foreclosure. It’s being administered by the federal department of Housing and Urban Development.
Which states are receiving the money?
32 states that did not receive previous “hardest hit” foreclosure prevention funds are eligible for the newest money. All the New England states except Rhode Island will receive funds. It’s being distributed based on the percent of homeowners with a mortgage who are unemployed.
Massachusetts will receive $61 million, the fourth largest amount. Texas is getting the most money with $132 million and New York is second and receiving $111 million.
Who’s eligible for the money?
The funds are for residents who have been notified that their home will be foreclosed on. Residents must earn at or below 120 percent of the median income for the area, have had a “significant income reduction” recently, or must be at least three months late on their payments. Residents can begin applying for the program by the end of the year.
What can the money be used for?
The funding will be distributed by third-party groups, such as Neighborworks and by federal and state-administered programs.
Up to $50,000 in “bridge-loans” can be given to homeowners to help make mortgage payments, taxes, and insurance or for past-due payments.
How bad is the foreclosure crisis?
According to The Warren Group foreclosures could break their 2008 levels. In August, there was a 13.2 percent increase compared to the same month a year earlier in foreclosure petitions, which is the first step in the foreclosure process. The number of foreclosure deeds that month more than doubled from the previous year.
Through the first eight months of the year there have already been more finalized foreclosures than there were in all of 2009.
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