Why The U.S Mortgage Aid Program is Shutting Down

In spite of the best efforts of many, the U.S Mortgage-Aid program is shutting down, and they still have $500 million in funds that haven't been spent. It's shocking, and if you're like me, you're probably wondering why. I mean, there are so many people who are out of work, looking for jobs without much luck, behind on their mortgage and in serious danger of losing their homes. With so many people in this situation, why would the program that was designed to help, shut down without spending their money? Certainly it isn't from lack of demand.

Helping homeowners stay in their homes isn't just about helping people who are having a tough financial time. It isn't just about charity and helping our fellow man. It is about our neighborhood, our towns, our communities and our future. Already, there are too many areas were the streets are filled with vacant homes. These properties are now owned by the banks, who are too overwhelmed to do anything with them. The people who used to live in them have been forced out and are now living in temporary shelters, with family and friends or even on the street. With no one there to tend to the properties, they become overgrown and bring down the property value and the spirit of the entire community.

It's hard to see so many vacant homes just sitting for months and years while homeless shelters don't have enough beds for everyone and many families are forced to sleep in their cars or on the street. With this problem being so widespread and affecting communities across the country, why is the program not doing what it was designed to do?

The program, that is being run by the federal Department of Housing and Urban Development, was designed to help almost 30,000 households. So far, it has only helped less than 15,000. The answer isn't exactly clear. The administrators say that the problems with the program are due to the way that it was set up in Congress. However, Representative Barney Frank, who wrote the legislation says that the problems are a result of poor administration and he blames HUD.

The program, called Emergency Homeowner's Loan Program, was created to give people who were unemployed or underemployed up to $50,000 in no interest loans to pay their mortgages. The program was signed into law in July of 2010 but didn't start accepting application until June of 2011. The original cut-off date for applications was in late July.

The mortgage counselor who worked with applicants said that the program's failure was that the eligibility requirements were complicated and overly restrictive. Applicants had to be at least 90 days behind on their mortgage payments, earn 15 percent less that they did in 2009 due to unemployment or serious illness. Once they met all of that criteria, if the repayment of the mortgage debt exceeded $50,000 they were ineligible.

According to the Philadelphia Unemployment Project, which processed applications here in Philadelphia, the stringent requirements made many people ineligible. In New York City, out of the 1,000 people who applied for help from the Neighborhood Housing Services, only 74 qualified for assistance. In Washington, one organization took 506 applications and only 49 people met the eligibility guidelines, and so far, only 26 had been approved.

There is some legislation on the table right now to extend the deadline and make the program less restrictive. It is being led by Senator Bob Casey, a Democrat from Pennsylvania. So far, the bill hasn't been voted on.

What do you think about this program? Do you think that the money should go back to the government or do you think the program should be less restrictive? Let me know in the comments.

By Melissa Kennedy- Melissa is a 9 year blog veteran and a freelance writer for PhillyJobsBlog and Nexxt, along with helping others find the job of their dreams, she enjoys computer geekery, raising a teenager, supporting her local library, writing about herself in the third person and working on her next novel.