No job, no mortgage payment- no problem. In North Carolina there is now a program that allows unemployed homeowners to receive zero percent loans to make the payments: [Hat tip Freedom’s Phoenix]
Both economists and lending institutions maintain that keeping people struggling to pay mortgages in their homes is preferable to eviction.
A new federally funded initiative targeting five states hard-hit by the recession, including North Carolina, is designed to do just that.
The program, which comes under the North Carolina Foreclosure Prevention Fund, allows eligible homeowners to receive up to $36,000 in zero-interest loans over 10 years. Residents of counties with the highest unemployment will qualify for the largest loans.
What does it take to qualify for this loan?
The unemployed must show that they’re looking for work or receiving job retraining.
Applications, free of charge, must be made through HUD-approved counseling agencies. Applicants must have had a good mortgage payment record before adversity struck.
How does repayment work?
If they subsequently sell the property for a profit, a portion of the loan must be repaid.
However, they are off the hook if they live in the home for 10 years:
If the owner continues to live in the home for 10 years, the loan will be considered satisfied and no repayment will be due.
While the perk is obstensibly for homeowners, it is obviously to protect the lenders. Note that the same benefit is not offered to renters, who would be just as hard hit by unemployment. Note that the money is not going in the pockets of the homeowners- the money goes to the lenders to keep people in their homes.
I wish we could at least call a spade a spade. This isn’t to “help unemployed homeowners” as the North Carolina Housing Finance Agency states, this is to help “lenders avoid losses”.