Many homeowners in San Diego are in serious financial distress. Everyone knows it, many people have good ideas about how to reverse it, but nothing seems to happen. In the third year of a housing market bust, there seems to be little hope in sight. What makes it even worse is to hear of programs like the Emergency Homeowners' Loan Program, or EHLP. This federal program was put in place to help unemployed or underemployed homeowners pay their mortgage debts. The program offered no-interest loans to qualifying homeowners.

It sounds perfect, but it didn't work very well. And now the program is being shut down. It helped less than half the number of people intended, and will have spent less than half of its original $1 billion funding.

Why didn't it work? The biggest reason seems to be that the eligibility rules were too restrictive. Homeowners had to be at least 90 days delinquent on their mortgage payments. They had to be making at least 15 percent less than they made in 2009. However, if the repayment of the mortgage and the repayment of the no-interest loan exceeded $50,000, the homeowner was ineligible. This last requirement eliminated almost everyone who applied.

San Diego debt negotiation attorneys noted that another factor that seemed to doom the program was that it did not get off the ground until June. When was the original application deadline? Late July.

Now the program will shut down on Friday. Even some homeowners who qualified and were approved will not get any money, since the funds have not been disbursed and the program ends this week.

Hopefully, Congress will try again, and remove the restrictions that hampered the program. In the meantime, though, many more homeowners will already be driven into foreclosure.

Source: NYT "U.S. Mortgage-Aid Program Is Shutting Down, With Up to $500 Million Unspent" Sept. 28, 2011