The federal Emergency Home Loans Program (ELHP) extended its application deadline last week and revised its qualification guidelines after having difficulties finding borrowers who met its criteria.
The program allows unemployed borrowers to draw no interest loans of up to $50,000 for up to 24 months in order to help them stay in their homes.
Massachusetts homeowners were allocated more than $61 million in loan funds for the program, potentially helping about 1,200 homeowners. But agencies here said they have had a tough time finding borrowers who met the program’s guidelines.
The main problem is that though there are many unemployed borrowers facing foreclosure, most of them are so far behind on their payments they would have hit the $50,000 loan limit after less than a year.
"It became clear to us as the program was progressing that a number of applicants were not qualified under the statutory framework of the program and that additional resources are available," said Brian Sullivan, a spokesman for HUD.
The change was made even though the agency itself had been leery of using such a short timeframe. "It does put them under added pressure to become re- or fully employed more quickly than if they received up to 24 months of mortgage assistance," acknowledged Sullivan.
Federal law requires the funds to be distributed by Sept. 30, and the new application deadline has been extended to Sept. 15.
But even though the deadline has been extended, many of the participating agencies aren’t actually taking new applications. In order to obtain a loan, applicants have had to apply through local community development groups, each of whom were assigned a number of slots to fill based on their own capacities and the size of the communities they serve.
As the funds are now being distributed on a first come, first serve basis, most feel that there will be many in their original applicant pools that can fill the slots under the new criteria.
"We got lots of interest [in EHLP], and continue to do so," said Chrystal Kornegay, president and CEO of Urban Edge, a community development corporation based in Boston’s Jamaica Plain neighborhood. "From our perspective, it wasn’t so much that they opened it back up again and let new people apply, it’s more we have to go back again and go back through the applications of people who have already applied and see if they qualify."
"We didn’t think we could accept any more and process in a timely manner," said Brian Moriarty, director of Brockton Foreclosure Office for Neighborhood Housing Services of the South Shore.
