Illinois "Hardest Hit" Program Offers Relief for Struggling Homeowners

Recently there has been a dramatic increase in the number of home foreclosures for the Chicagoland area. This is just another sign that the housing industry is not rebounding as quickly as the government had hoped.

According to RealtyTrac 6,239 notices of mortgage default - the first step in the foreclosure process - were filed in Chicago counties in August jumping 30 percent from July. RealtyTrac expects these numbers to fluctuate over the next several months. These Chicago foreclosure numbers show that new regulations intended to protect homeowners aren't serving their purpose.

However, help may be on the way. In September the state of Illinois announced the Hardest Hit program and fund, which is expected to provide relief for struggling Chicago area homeowners. The fund carries a long list of eligibility criteria, but for those who qualify it will be the only loan of its kind and should be extremely helpful. After qualifying, unemployed and underemployed homeowners could receive as much as $25,000 in mortgage help.

Homeowners can apply for two different types of temporary mortgage assistance:

  • Reinstatement assistance to help pay mortgage fees and penalties
  • Monthly mortgage payment assistance

If all criteria are met, the homeowner will not have to repay the $25,000 loan.

The program has been met with some concern, however, because of its long and stringent list of eligibility requirements. Critics fear it may not offer help to enough struggling homeowners. It is tailored to low- and moderate-income households and those who are unemployed or underemployed through no fault of their own.

These homeowners must be working to regain employment and keep their home. Some of the more downtrodden are concerned they will not qualify for this 10-year forgivable loan.

Another option for struggling homeowners is filing for Chapter 13 bankruptcy. This halts the foreclosure process and gives homeowners the breathing space necessary to develop a workable payment plan.