Homeowners Get 50K From Gov Without Repayment

Government homeowners loan program

It seems every month or so there is a new government housing program to help troubled homeowners. So far, industry data suggests that all these programs have been dismal failures. Yet again, it appears the great minds in Washington think that if they offer free money to homeowners they will have a ‘successful’ program.

The Emergency Homeowners Loan Program which is scheduled to be in operation by the end of the year will offer the unemployed a no-interest 2 year government loan for up to $50,000, to pay their mortgage and cover the arrears. There are qualification requirements, a few of which are: the home must be the principal residence,  the owner cannot own a second home, be at least three months behind in payments, have a reasonable likelihood of being able to resume payments within two years,  have suffered at least a 15% drop in income, and able to afford the mortgage before the income loss.

So far, it sounds like a good idea to help the unemployed although the no-interest part of the loan is a little too generous. I think a low interest, CD-like rate, would be more realistic and be an incentive for early pay-back. However, the crazy part of this new government program is that if the homeowner stays in the house for five years, the loan will be forgiven!