A government program aimed at helping unemployed homeowners avoid foreclosure ended with more than half its money unspent.
The Emergency Homeowners' Loan Program ended last month and the government will use only $432 million of the $1 billion it set aside for the program, according to USA Today. The reason? Officials charged with administering the program couldn't approve enough applicants in time to receive the aid.
The Department of Housing and Urban Development approved 11,832 of the 100,000 applications for the program, which was enacted as part of the Dodd-Frank regulations passed in response to the financial crisis, according to USA Today. Officials initially said that the program would provide $50,000 to 30,000 unemployed or underemployed homeowners in order to avoid foreclosure.
One of the reasons for the low number of approved applicants could be the strict requirements of the program. In order to receive a loan, applicants had to prove that their income had fallen by at least 15 percent due to the economic downturn, according to The Washington Post. In addition, applicants had to prove that once the loan disappeared -- it has a maximum of two years or $50,000 -- they'd be able to resume paying their mortgage.
Organizations across the country reported having difficulties finding applicants who qualified as the deadline for the loan neared at the end of last month, The New York Times reported. At a community development corporation in Minnesota's Twin Cities of St. Paul and Minneapolis, 31 out of 250 applicants received approval, according to the NYT.
A non-profit in California faced a similar uphill battle; the organization deemed 25 of the 1,200 applicants qualified and of those 25, five were approved as of Sept. 28, The Times reported.
The Emergency Homeowners' Loan Program is just one of the Obama Administration's loan modification programs that haven’t reached their goals, according to Propublica. Others include the Home Affordable Refinance Program, which aimed to help 4 to 5 million homeowners refinance their mortgages at low interest rates and a plan that gave money to state governments to experiment with programs for helping homeowners.
The Home Affordable Modification Program -- a plan also passed as part of the Dodd-Frank reforms that aimed to use subsidies to push bailed-out banks to modify home loans -- has also had less than stellar results. When Obama first introduced HAMP in 2009 he said it would help 3 to 4 million homeowners; instead, the program has helped less than 700,000.
Despite the deluge of programs aimed at helping homeowners and the housing market, the industry that precipitated the recession has yet to recover. A surplus of foreclosed properties is continuing to push home prices down and millions of homeowners owe more on their homes than they're worth.