One million Americans have exhausted all of their federal and state unemployment benefits and many of them, now known as 99ers, are facing foreclosure. HAMP, the foreclosure prevention program that was suppose to take a huge bite out of the foreclosure crisis, has failed miserably and left many unemployed homeowners marooned facing imminent foreclosure with no aid in sight.
HAMP reports that 58 percent of its applicants cite unemployment as the primary reason for foreclosure. And a recent study by economists at the Federal Reserve shows that four in five subprime mortgage holders who default do so due to income loss.
But a new proposed program modeled after Pennsylvania's Homeowners' Emergency Mortgage Assistance Program, or HEMAP, which has successfully helped 43,000 unemployed mortgage-holders, could be the answer to many unemployed homeowners' prayers. If the proposed program is approved, unemployed homeowners facing foreclosure could receive low-interest loans for up to $50,000 for up to two years while they search for work. Legislators are considering funding the program with funds from the Troubled Asset Relief Program; but some lawmakers are suggesting that mortgage lenders be charged some type of fee directly that could fund the foreclosure prevention program. Unemployed homeowners in the program would then make low monthly payments to the Department of Housing and Urban Development while they are unemployed and then would repay the government after they secured work. The major problem with this type of program is that while it may prevent foreclosure for the unemployed homeowner, it won't address all of the other financial issues the debtor may be facing. For example if a debtor has lost all income, they probably have other bills that are due such as credit cards, student loans, car loans etc. Will the government loans be enough to pay for all of those expenses too?