More Fund for Jobless Homeowners of Washington, D.C.
August 12, 2010 Leave a comment
Good News for those of you Washingtonian unemployed with the mortgage payment responsibility! The administration announced yesterday that they send a $3-billion lifeline to jobless homeowners struggling to make mortgage payments.
One program will assist 17 states with higher than average unemployment, along with Washington, D.C.
Another part of the plan includes a new $1 billion program that will offer loans to unemployed borrowers at risk of losing their homes. The loans, which will be dispersed through nonprofit and housing agencies, will carry 0% interest and be good for a maximum of $50,000 for up to two years.
Working with state and nonprofit groups, the HUD program will give “bridge loans” to borrowers who are at least three months delinquent in their payments but likely to begin repaying their mortgage within two years. To be eligible for the program, borrowers must show a strong repayment record before the loss or drop in income. The loans will help them pay their mortgage principal, interest, mortgage insurance, taxes or hazard insurance.
Let’s do some math here :
Given the current market condition, if the borrowers ask for average of $30,000 loan, that will cover only 33,000 households ($1B / $30K). Given, 269,962 U.S. homes were repossessed by banks in the second quarter of this year only (according to RealtyTrac), is that enough household to cover? I doubt the efforts make much of a difference. It will certainly help the people that actually get the loan. But in terms of the overall situation, it’s so small that it’s not going to have an economy-wide impact, and that’s the sort of thing people are looking for.
What am I missing in my calculation here? Appreciate comment from anyone with more expertise on this.