"No one could have anticipated how difficult the statutory requirements make it to reach homeowners," said Lemar Wooley, a HUD spokesman. Those who make the cut are expected to receive between $35,000 and $45,000 in aid, he said. Many had high hopes for the loan program because it was targeting a segment of delinquent homeowners not being helped by other federal initiatives, such as mortgage modifications. Passed last year as part of the Dodd-Frank Wall Street reform bill, it was modeled after a very successful program in Pennsylvania that has helped tens of thousands of residents since 1983. The federal effort offered interest-free, forgivable loans to homeowners who lost at least 15% of their income because of the economy or their own medical condition. Applicants had to be at least 90 days delinquent, facing foreclosure and show that they could resume payments if they found a new job. 10 dirt-cheap housing markets If they qualified, they could receive up to $50,000 or 24 months of assistance, whichever came first. The initiative quickly became a quagmire of delays and requirements, however. The rollout was postponed for months, finally launching in late June. HUD originally gave people less than six weeks to apply, but then pushed back the deadline to mid-September. But it was the income and delinquency guidelines that prevented many seemingly eligible people from getting assistance, housing counselors say. HUD used a complicated formula that took into account monthly payments, income and arrears. Only 34 of the 174 homeowners who came to Tierra del Sol Housing Corp. in Las Cruces, N.M., met the criteria, said Rose Garcia, the agency's executive director. Some people were turned away because they were already too far behind in their payments or because their income fell because of a family member's illness. "This program could have made a difference to save people from being homeless," she said. "But it doesn't meet people's needs." 0:00 / 2:33 'The bank owns my town!' In Philadelphia, Michelle Lewis is waiting to see how many of the 400 applications her Northwest Counseling Service received will be approved. She fears it will be few. One problem she ran into was that many applicants lost their jobs more than a year ago. Under HUD's rules, the circumstance that caused the delinquency had to have occurred within the past 12 months. The Pennsylvania loan program, which ended in June because of state budget cuts, allowed for many more hardship conditions so it was able to reach more people than the federal effort, she said. "The [HUD] guidelines were so restrictive that it knocked out a lot of otherwise eligible and worthy consumers," said Lewis, the agency's chief executive.
