To be eligible, borrowers have to be at least three months behind on payments and, "have a reasonable likelihood of being able to resume repayment of their mortgage payments and related housing expenses within two years."
I'm not sure what that means, but that's just me.
They have to be owner-occupants and not own a second home.
They also have to have had a good payment record prior to unemployment.
At face value it seems pretty basic…the government will lend the borrowers up to $50,000 each for up to 2 years to pay their mortgages.
The loan is 0% interest.
But then I got to thinking…the trouble today is not that so many more people are losing their jobs, it's that those who have already lost their jobs are having a hard time getting new jobs. Plus they're already way behind on all kinds of debt. By giving many of these folks cash to pay their loans, the government is essentially putting them deeper into debt.
Blatantly absent from the release today was any information on how borrowers would be required to pay this "bridge loan" back.
So I asked the folks at HUD and got the following response:
"We are still working on the details of repayment. However, the statute gives the Secretary broad latitude to prescribe the terms and conditions of any loans and repayment. We are exploring options that provide incentives for borrower payments for their primary mortgage while deferring the repayment of the assistance funds."
In addition to this new program, the Treasury announced it was adding another $2 billion to the state's "Hardest Hit Fund," a program that started in February of this year and is described above. The addition of funds brings the total to just over $4 billion, even as it's still getting under way in most states. "Each state will use the funds for targeted unemployment programs that provide temporary assistance to eligible homeowners to help them pay their mortgage while they seek re-employment, additional employment or undertake job training."