HUD Secretary Still Concerned About Housing

Shaun Donovan, Department of Housing and Urban Development Secretary spoke with CNN on its “State of the Union” show about the Obama Administration’s plan to set up an emergency loan program for the unemployed and a new government mortgage effort to help homeowners.

The programs include $2 billion of additional assistance for states hit hardest by unemployment so they can help homeowners struggling to make their mortgage payments.  Additionally, HUD will launch a complementary $1 billion Emergency Homeowners Loan Program to provide assistance to homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition.

RMD asked HUD whether the emergency loans could be used to help seniors with reverse mortgages pay their taxes and insurance, but the details are still being worked out. There is clearly a need for some type of government assistance after a report from the Office of the Inspector General shows that nearly 13,000 HECM borrowers are in default from failure to pay taxes and insurance.

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According to HUD, the emergency loan program will be a deferred payment “bridge loan” (zero percent interest, non-recourse, subordinate loan) for up to $50,000 to assist eligible borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes and hazard insurance for up to 24 months.

When asked about the National National Association of Realtors report that shows the sale of existing U.S. homes sank 27.2% in July, the Secretary said it needs to act.

“The July numbers were worse than we expected, worse than the general market expected, and we are concerned,” Donovan said during the interview. “That’s why we are taking additional steps to move forward.”

Obama Plans Refinancing Aid, Loans for Jobless Homeowners, HUD Chief Say

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  • Why isnt the HUD Secretary concerned about seniors who live in stock co-operative housing (co-ops) losing their homes due to risk of foreclosure because they have lost income due to the economic recession, loss of income, unemployment, medical costs, etc.? These seniors, like myself, can not access equity from their homes because of HUD’s stalling to implement the HECM reverse mortgage program. WE NEED HELP as much as these other homeowners but are being ignored for over 2 years since the HERA bill was signed into law. HUD is forcing many seniors, through no fault of their own, to lose their homes. We want to be able to get our HECM now to enable us to live comfortably in our retirement years.

    • Akoolkat,rnrnGet your petitions to Representative John Campbell and Senators Feinstein and Boxer. rnrnWhile I sympathize with your plight, I agree with the concerns of HUD and the lenders. What Congress did was a knee jerk reaction when the FHA insurance pool looked a whole lot better. The risks with coops are enormous.rnrnWe all know if the coops converted to condos, values would shoot up and in most cases, HECMs would be readily available. If that is too costly, then the wait is still on.rnrnI wish you well and hope the problems get quickly ironed out for all. I would not be holding my breath on this one….

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