So, you went through the criteria listed in the last post and determined that you qualify for help from the EHLP program. But the program won't come find you, you have to apply. How do you get your money before the big bad lender boots you out? Yep, there is a form to fill out, documentation to provide, and a procedure to follow. But the good news is that EHLP isn't administered by your mortgage servicer :)

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HUD is not taking applications for this program yet; the agency expects it to be up and running by the end of 2010. Fortunately, the robo-signing scandal and the halt to mortgage foreclosures may work in borrowers' favor as they try to hold out long enough to save their homes (for more information about delaying foreclosure, check out this MCP blog post). The program will be administered by third parties. HUD will enter into a cooperative agreement with the National Foreclosure Mitigation Counseling Program administered by NeighborWorks® America to provide intake and outreach services. States Housing Finance Authorities (HFAs) will also be allowed to qualify borrowers and dispense funds.

The counselors shall also be encouraged to conduct outreach to entities in local communities to provide information on assistance available to unemployed homeowners through this program and shall publicize the list of entities approved to assist potential applicants with applying to the program. Those in these states should look up their states' HFA Web site and also go to the NeighborWorks® site periodically for updates. Guidelines for applying will be coming soon and we'll do our best to get them up on this blog as well.

How does the program work?

The amount of aid you can get depends on your mortgage payment and your income. Once qualified, your loan will be brought current and your total housing payment (including principal, interest, taxes, insurance, homeowner dues, etc.) will be lowered to 31% of your gross monthly income. So Mary, the homeowner in the last post, would receive $3,600 to make up her three missed mortgage payments ($1,200 each). Next, her monthly payment would be determined by multiplying her monthly income by 31%. Her income is $2,000, so she would be expected to pay $620 a month instead of $1,200. The fund would pay the difference of $580 for up to 24 months. $580 a month for 24 months equals $13,920. Since this is much less than the maximum of $50,000, she can probably count on receiving assistance for 24 months if she needs it.

But you have to keep qualifying continuously.

Mary's income is monitored the whole time she is in the program. After initial income verification at application intake, she is required to notify the fiscal agent of any changes in the household income and/or employment status at any point throughout the entire period of assistance. Is she gets a raise, the amount she pays on her mortgage each month increases, but if her hours and income get cut, her required payment goes down. If her income increases to 85% of her income before her hardship (when her husband left), she would be terminated from the program. That income was $4,000, and 85% of that is $3,400. So if she were to hunt the husband down and get $1,400 a month child support from the guy she would not get any more EHLP benefits.

Do the funds have to be repaid?

Yes and no. It's called a loan, and it does take the form of a lien that is secured by the property. But it has a five-year declining balance feature. That means the balance of the note goes down 20% each year until in five years it drops to zero. So you don't have to repay it as long as you maintain the property as your principal residence and remain current on your monthly mortgage payments. Do that for five years and you are home free. Mess up the payments and whatever balance remains becomes due and payable. Ditto if you sell the property, cash out any equity, or move out.

Borrowers living in the following jurisdictions are eligible to receive funds. Everyone else has "Hardest Hit" programs that are already in force or will be soon. Check with your state for details.