Last week the government started a new program called the Emergency Homeowners Loan Program (EHLP). According to the Department of Housing and Urban Development, or HUD, the purpose of the program is to try and slow down the flood of home foreclosures and therefore help the severely ailing housing market. The program will cost tax payers about $1 billion and offers loans up to $50,000. The amazing part, as long as you meet certain requirements, you don’t have to pay the loan back. It would just be free money. Those behind the program say the goal is to offer aid to those individuals who look like they will be back on their feet soon.

In order to qualify, homeowners must have lost income and be at risk of foreclosure due to involuntary job loss, underemployment or a medical or other economic conditions. “Other economic conditions” seems fairly vague to me.

The loans would be interest free and payments would go directly to the homeowner for a portion of their monthly mortgage, including missed payments or past due charges. This would last for 2 years and give up to $50K. When the assistance period ends, 20%of the loan is forgiven with every passing year. So for those people who stay in their homes for at least five years after they receive the monthly payments they will not have to repay the money.

Some critics, however say the loans may leave homeowners worse off in the long run and get them further into debt. If they sell their house before the 5 years or fall behind on their mortgage payments again they'll need to repay the remaining balance of the loan. Furthermore, borrowers aren't required to have equity in their home to receive this free money, so someone who has to repay the loan risks owing more on the home later than they already do.

Considering there are around 4 million borrowers who are behind on their mortgages by at least 90 days or are already in foreclosure, this $1 billion is just a drop in the bucket. So far other federal assistance programs, like the Home Affordable Modification Program, haven't impacted a significant number of borrowers at all. Essentially, the government’s plan is to keeping throwing tax payer dollars to people who can’t keep up on their bills and just cross their fingers it is going to help the housing market. Sure, there are people out there that have lost their jobs and legitimately just need a little help until they are able to catch up. However the majority of this money is going to people that live completely out of their means, make unnecessary purchases, and are unable to manage their money appropriately.

So what the government is telling us is that if we go around buying more of all the junk we don’t need and then can’t pay our bills – don’t worry – we’ll make those idiots that are financially responsible pay the bills for you!

I think with the next few months of mortgage payments I’ll go buy 87 copies of Waterworld on DVD and a jet ski! So what if I live in a row home in the city. Have you ever been on a jet ski? They’re sweet.
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Nick Haneiko

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  1. I am a 26 yr old single mother of 2 kids and i am unemployed..I need help from the Government to pay my bills..i dont like seeing my kids suffer and yet not understand what is going on...i just ask for help to pay my bills soon pleaseee!