foreclosure prevention: overview » financial assistance » offer refinancing products and emergency loans » emergency loans

In cases of temporary financial hardship, a small amount of assistance may make a large difference for a family. Housing finance agencies can craft these emergency loans to meet local needs and economic realities. Small and/or short-term loans are clearly not capable of preventing foreclosure for every family, but they play an important role in a community’s overall foreclosure prevention strategy by helping families stabilize their finances before delinquencies get out of control. Temporary financial assistance products are often designed to help families retain stable housing during unemployment or sudden losses of income. As unemployment problems last for extended periods of time, the assistance provided by "short-term" loan programs has grown more similar to deeper assistance approaches, such as silent second mortgages.

The table below summarizes the assistance offered by four different short-term emergency loan programs. Click on the state to read more about each program.

State
Loan Program
Maximum Loan
(in total $)

Maximum Loan
(in number of mortgage payments)

Interest Rate
Pennsylvania
Homeowners' Emergency
Mortgage Assistance Program (HEMAP)
$60,000
24 months
9 percent
North Carolina
Mortgage Payment Program$24,000 or $36,000 depending on county of residence
24 months or 36 months depending on county of residence
0 percent
New Jersey
Mortgage Assistance Pilot Program$20,000
6 months
0 percent
Delaware
Delaware Emergency Mortgage
Assistance Program (DEMAP)
$25,000
24 months
3 percent, simple



Click on the links below to learn more about loan products that can help families avoid foreclosure:

Grant short-term emergency loans

Make available low-interest refinance loans

Refinancing with flexible underwriting requirements, silent second mortgages, or shared appreciation loans



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Strategies that provide immediate foreclosure prevention assistance include 24-hour hotlines and expanded outreach by reliable non-profit assistance organizations.


Legal Assistance
Legal assistance can be a critical resource to help families stay in their homes and prevent financial losses by negotiating alternatives to foreclosure.


Extending the Foreclosure Timeline
Extending the process of home foreclosure through a temporary moratorium on foreclosure or by increasing the notice period required before a foreclosure may take place may allow homeowners additional time to reduce the financial damage of foreclosure.

Reduce the Risk of Foreclosures in the Future
Foreclosure risks are often identifiable and preventable many years in advance. Governments can counter these risks through targeted outreach, regulations to prohibit the riskiest loans, and enhanced consumer awareness to help families make better mortgage decisions.

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Pennsylvania

In Pennsylvania, the Homeowners' Emergency Mortgage Assistance Program (HEMAP) has been a long-standing tool for helping homeowners weather temporary financial crises. The program provides either a single loan to bring a mortgage current or continuing mortgage assistance for no more than 24 months, up to a maximum of $60,000. Owner-occupants of one- or two-family homes with fully amortizing mortgages are eligible for assistance. Borrowers must have a good mortgage payment history for the prior five years, with exceptions for periods of financial hardship beyond their control. PHFA does not limit eligibility for HEMAP based on income, credit score, or the amount of equity in the home. Lenders are required to inform borrowers of the HEMAP program if a mortgage is at least 60 days delinquent.

Monthly payments vary with household income to ensure that HEMAP borrowers do not pay more than 40 percent of household income on housing costs. The minimum monthly payment is $25 per month. For households repaying based on the 40-percent calculation, the loan has an interest rate of nine percent; interest does not accrue when the loan is on a $25 per month repayment plan.

The state developed HEMAP with some flexibility to be able to provide even more assistance in times of high unemployment. If the average unemployment rate in the state is 6.5 percent or higher, applicants for HEMAP loans can receive up to 36 months of assistance and will be able to repay the loans based on 35 percent of income going toward combined housing costs rather than 40 percent.

The program was created in 1983 and is funded principally through the repayment of HEMAP loans. When needed, these funds are augmented through state appropriations. In July 1, 2011, the program did not have sufficient funds to make additional loans and was temporarily suspended for new borrowers. The high levels of need in Pennsylvania have made HEMAP vulnerable to additional temporary suspensions.

See the Pennsylvania Housing Finance Agency web site for more information about HEMAP.

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North Carolina

Expanding on the state's earlier Home Protection Pilot Program, North Carolina offers a statewide Mortgage Payment Program to prevent foreclosures in households affected by job loss or other temporary financial setback. In high-unemployment counties, homeowners may receive a no-interest, 36-month loan for up to $36,000. In the rest of the state, homeowners who qualify may receive a no-interest, 24-month loan for up to $24,000. Loans may be offered as one-time sums, short-term loans, or longer-term loans depending on the borrower's circumstances. Applicants also receive a 120 day temporary stay of foreclosure upon receipt of their application. After five years in the property, the loan balance is reduced by 20 percent each year until year ten when it is completely forgiven. If the home is sold or the mortgage is refinanced before that period (unless the refinance is to obtain better terms), the loan must be repaid. More information on North Carolina's Home Protection Pilot Program is available on the North Carolina Foreclosure Prevention Fund web site.

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New Jersey

New Jersey's Mortgage Assistance Pilot Program (MAP) offers short-term loans to households at risk of foreclosure due to either temporary income loss or an unsustainable mortgage. Borrowers facing temporary income loss must be at least 60 days delinquent or in foreclosure.  Borrowers with unsustainable mortgages must have loans with certain risky characteristics, such as negative amortization, interest-only, or prepayment penalties. The zero-interest, deferred payment loans are available for a maximum of $20,000 or six months of mortgage payments. Borrowers must show that they can afford the mortgage again at the end of the loan period.  More information on MAP can be found on the New Jersey Housing and Mortgage Finance Agency web site.

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Delaware

The Delaware Emergency Mortgage Assistance Program (DEMAP) provides loans to help families experiencing a temporary financial hardship due to circumstances beyond their control. Borrowers that are at least 90 days delinquent and at risk of foreclosure can obtain a DEMAP loan for up to $25,000 or 24 months of mortgage payments. The loan may either be received as a single payment to bring the mortgage current or a series of smaller, ongoing payments to assist with regular mortgage payments. Qualification is based in part on household income levels, which are annually adjusted. Small monthly payments are due throughout the loan period and are calculated based on the borrower's income. More information on DEMAP can be found on the Delaware State Housing Authority web site.

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