The majority of the unemployed that were looking for the Dodd-Frank Wall Street reform bill that passed in 2010 to help save their homes from foreclosure are heading straight for disappointment. According to the U.S. Housing and Urban Development Department (HUD), of the 100,000 applications received, only about 10,000 to 15,000 of the applicants actually met the strict criteria to qualify. This means the other 85,000 applicants may soon find themselves going through the foreclosure process and out on the streets, if they do not find a job or another way to save their home soon.

Dodd-Frank Wall Street Reform Bill

The federal law has its roots in a state reform program introduced by the state of Pennsylvania to help reduce the foreclosures for its residents. The federal program requires that the homeowner be a minimum of 90 days delinquent on their mortgage and going through or heading toward the foreclosure process with their current lender. The program offers a refinance with an interest-free mortgage loan that also has a forgivable option to it, if the homeowner lost 15 percent or more of their income because of the economic situation or because of a major medical condition.

The federal program is to help a specific set of borrowers. This particular program has the intended purpose of helping unemployed individuals that did not qualify for a mortgage loan modification, state foreclosure help programs, and the myriad of other government programs created to try to save borrowers from losing their homes.

The Assistance

Each homeowner that qualifies for the program receives between $35,000 and $50,000 in help from the program, or help for a 24-month period, whichever of the two occurs first. The program is meant to be short-term meaning when the unemployed becomes employed, they will resume making their mortgage payments on their own once again without continuing to receive financial assistance from the program.

The Problems

According to the housing counselors working with the HUD and the applicants for the program, there is a low qualification rate because the majority of the applicants did not meet two of the primary criteria. The two unmet criteria include:

• Income requirements
• Delinquency rate

The HUD used a proprietary, and some say complex, formula to determine income eligibility for the applicants. When the calculations were done on the approximately 100,000 applications that were submitted, only up to 15,000 unemployed homeowners are expected to benefit from the program.

According to the executive director overseeing the program in New Mexico, only 34 of the 174 applicants for the program will receive approval in the state. The applicants that were turned down were either too far along into the foreclosure process to stop it or they did not meet the income requirements to pay on the interest-free mortgage loan.

In Pennsylvania 400 applications were submitted and the executive director for that program has not given an exact number but expects very few of the applicants to actually qualify for the program.

While the exact figures will not come in until Friday, October 7, the outlook is bleaker than first thought. While the unemployed may have seen the bill passing as a panacea for their foreclosure problems, at least until they obtain a new job, more unemployed will end up disappointed than assisted by the program. Executive directors of the program are blaming the strict criteria the HUD established for the applicants to qualify. In the end, this means that HUD, which set aside $1 billion to help these homeowners, will end up spending less than half of this money.