It stood a good chance of not surviving intense negotiations, but a key provision in the new financial reform bill has made its way through the Senate-House reform deliberations – and it gives unemployed homeowners access to government cash to pay their home mortgages and avoid foreclosure.
But don’t get too excited yet – there might be a catch that trips jobless homeowners up.
Buried inside the 2,000-page financial reform bill, which still has to pass the Senate and the House), is language that provides $1 billion in aid to unemployed homeowners.
That aid package, ushered along by U.S. Rep. Chaka Fattah (D-PA), was modeled after a Pennsylvania program called the Homeowner’s Emergency Mortgage Assistance Program (HEMAP). Fattah actually introduced that bill as a state legislator earlier in the decade (it’s generated $236 million in aid to Keystone state residents) and the idea is the same with both bills.
While the ink has yet to dry on the homeowner relief provision, and it could face some tweaks before financial reform is passed, the current incarnation of the bill stipulates that qualified homeowners may borrow up to $50,000 to help them keep up with their mortgage payments, and hang on to their house in the process. The loan rests on several preconditions, the most important of which might be that loan recipients have a “reasonable” shot at getting a job and resuming their mortgage payments within two years.That’s a fairly subjective tripwire and Congress hasn’t been clear about the criteria it will use to determine what’s reasonable and what isn’t.
In addition, the $1 billion granted under current language in the bill wasn’t what Fattah wanted – he asked for $3 billion originally – but the Philadelphia congressman will take what he can get.
"Americans need help, 8 percent of all mortgage holders are currently at risk of losing their homes and that is unacceptable," Fattah said. "I'm encouraged that my colleagues supported the mortgage relief provision in conference to ensure that families won't be faced with the double blow of being unemployed and homeless."