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$300 million fund can help unemployed pay mortgage

The continued high level foreclosure properties is slowing comeback housing market according industry experts.|AP File Photo

The continued high level of foreclosure properties is slowing the comeback of the housing market, according to industry experts.|AP File Photo

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Updated: May 3, 2013 12:15PM



There is $300 million sitting at the Illinois Housing Development Authority — just waiting to help homeowners who have fallen behind on their mortgages.

It’s called the Illinois Hardest Hit program — and the money comes from an allotted $7.6 billion of federal Troubled Asset Relief Program funds, designed to help those in danger of losing their homes to foreclosure because they have lost their job or taken a cut in income.

The “Hardest Hit” program is aimed directly at helping people before the situation gets out of hand. Those who are a few months behind in paying their mortgage can get a grant — free money — to bring them up to date. And the program will keep helping them pay their mortgage, up to $25,000 over 18 months, so they can stay in their homes.

This program couldn’t come at a better time, because Illinois has the third-highest inventory of foreclosed homes in the nation at 5.3 percent of all mortgaged homes. In the Chicago metro area, at yearend, there were 96,996 homes owned by banks or in the process of foreclosure. That has kept pressure on home prices, making it difficult for even those who have jobs to refinance to more affordable payments.

Past failed attempts

It’s not as if there haven’t been attempts to stop the foreclosure crisis. Under the Bush administration a telephone hotline was set up, (888) 995-HOPE. It helped few people and was mired in red tape as financial institutions struggled to deal with delinquencies.

That was followed by the Obama administration’s “Making Home Affordable” program (www.MakingHomeAffordable.gov). But it, too, failed to stem the tide of foreclosures, as its modification plan was viewed as too complex for mortgage servicers to handle.

That was followed last fall by the Home Affordable Refinance Program (HARP), designed for people who were current on their payments but underwater on the value of their home vs. the amount of the mortgage. Both programs remain in effect but have had minimal impact on foreclosures.

Making a difference

Illinois Hardest Hit, which started in the past six months, is the most likely to make a difference. Already 2,500 homeowners have been helped, and of that number more than 400 have exited with homes intact and resumed making their own payments as they regained their income. Federal officials have said that of the 19 states receiving funds under this program, Illinois has done the best job so far in getting the assistance to troubled homeowners.

Housing advocates are trying to get the word out about this relatively new program.

“This is the best tool in our toolbox now for keeping people in their homes,” said Neighborhood Housing Services Executive Director Ed Jacob. “It recognizes that the cause of foreclosure has moved to loss of income, as opposed to poorly underwritten loans. That’s the real challenge we’re seeing in the neighborhoods.”

The real issue now is getting people into the program before they are too far behind on their mortgage.

IHDA Executive Director Mary Kenney says: “We’re trying to reach as many people as possible and early in the foreclosure process, before they incur a lot of interest and late fees. Once the application is completed, we can generally get the processing done and payments made directly to the lender within 60 days.”

Despite the notorious complexities of dealing with lenders, more than 200 mortgage servicing companies are participating in the program, willing to accept payments from the fund on behalf of homeowners who have fallen behind.

Even better, because the first step requires meeting with a HUD-certified housing counseling agency, applicants are likely to have an easier time in the process.

How it works

Of course there are restrictions on this helpful mortgage grant deal:

◆ The property must be located in Illinois.

◆ The owners much have a documented income reduction of at least 20 percent, through unemployment or underemployment.

◆ Household income must be below 120 percent of area median income. (In Chicago that’s $63,720 for an individual.)

◆ Principal loan balance must not be more than $500,000.

◆ Household liquid assets cannot exceed $10,000 (or $12,500) depending on county of residence.

◆ Homeowner must reside in the property, and the homeowner cannot own any other residential property in Illinois, or in any state.

Getting started

For help and information on how to apply, visit the Illinois Foreclosure Prevention Network website at www.KeepYourHomeIllinois.org and click on the Illinois Hardest Hit program link. There is free counseling available, so if the Hardest Hit program is not for you, there may be other help available. If you don’t have Internet access, you can call 855-KEEP411 (533-7411), where operators are ready to assist you.

But funds are limited, so don’t delay. It sounds too good to be true, I know. But it’s the real deal. And that’s the Savage Truth.

Terry Savage is the Chicago Sun-Times’ nationally syndicated financial columnist, and a registered investment adviser. Post personal finance questions on her blog at TerrySavage.com and blogs.suntimes.com/savage.



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