A federal mortgage program to help the unemployed is ending.
NEW YORK (CNNMoney) -- The federal government can't even give money away to help the unemployed pay their mortgage.
A $1 billion program to assist the jobless will likely end up spending only half the funds, at most, because so few people met the strict criteria.
The Housing Department, which had to approve the applications for the Emergency Homeowners' Loan Program by Friday, expects that only 10,000 to 15,000 people will qualify. That's only a small sliver of the roughly 100,000 who applied.
"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.
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."
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.
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