What are HUD Foreclosure Grants?

HUD Foreclosure Grants refer to $73 million, made available through President Obama’s comprehensive Homeowner Affordability and Stability Plan (HASP).  Grants will be distributed by the U.S. Department of Housing and Urban Development to over 500 national, regional and local organizations to provide housing counseling and training in an effort to help families find housing and to prevent future foreclosures.

photo credit: nikcname

The federal government sees the HUD-approved housing counseling agencies as a critical part of the nation’s housing recovery. HUD awards annual grants under the housing counseling program through a competitive process. Organizations that apply for foreclosure grants must be HUD-approved and are subject to performance reviews to maintain their HUD-approved status.  Much of the HUD foreclosure grant money will be distributed to community-based organizations providing assistance to low- and moderate-income families looking for better housing conditions.

What is the Purpose of HUD Foreclosure Grants?

The purpose of HUD foreclosure grants is to provide monies to agencies that provide counseling and education to people in an effort to help them keep the homes that they already have. Many people are desperate to stay in their homes, and services and education sessions resulting from the HUD foreclosure grants will support families on a one-to-one basis with information to help them manage their money, provide assistance with mortgage scams, and mortgage modification and refinancing.

Many families may qualify for a special loan modification or refinance – which could reduce their monthly mortgage payments – through the Making Home Affordable program.  The U.S. Department of Housing and Urban Development provides a search tool where homeowners threatened with foreclosure can find an agency in their area that offers free foreclosure prevention counseling.  Counseling on how to avoid foreclosure will help homeowners who are at risk for defaulting to take actions such as reducing their expenses, negotiating with mortgage lenders, and seeking loss mitigation in order to prevent foreclosure.  Counselors at agencies receiving HUD foreclosure grants will work with families who meet the requirements for the refinance or loan modification program to get started with the process of working with their loan servicer.

The counseling services funded by HUD foreclosure grants are offered for free by nonprofit agencies that work in collaboration with the Federal Government. If a family is facing foreclosure, this free counseling allows them to avoid paying for mortgage modification services from a private company. In fact, no fee should ever be charged for assistance with or information regarding the Making Home Affordable Program. Consumer tips for avoiding mortgage modification and foreclosure rescue scams can be found through the U.S. Treasury Department.  If a person has been scammed, they should contact a HUD-approved housing counselor through the Homeowner’s HOPE Hotline at 888-995-HOPE (4673).

How Long are the Current HUD Foreclosure Grants Available?

The HUD foreclosure grants provide monies for a variety of programs. Each has its own expiration date. For example, the Home Affordable Refinance Program (HARP), made available through HUD foreclosure grants, is only in effect for a short period of time. The program expires on June 10, 2011.  If you are refinancing using HARP, you must have a mortgage note date on or before that date.  In contrast, all servicers for loans guaranteed by Fannie Mae and Freddie Mac are required to participate in the Home Affordable Modification Program (HAMP). This program is available through December 31, 2012.  Trial modifications must be in place before that date.  Homeowners at risk of foreclosure can go to the Making Home Affordable website and reference the Homeowner Frequently Asked Questions to find the expiration dates for all programs.

Where can I find HUD Foreclosure Grants?

A list of the HUD foreclosure grants and the agencies that have received them, organized by state, can be found at the HUD website. For more information on foreclosures, see the article entitled “What Causes House Foreclosures?”