Unemployed? Get a federal loan to pay your mortgage

NEW YORK (CNNMoney.com) -- Unemployed and can't pay your mortgage?

You can soon apply for a no-interest government loan for up to $50,000 to pay your mortgage and cover your arrears. The loan, which can offer assistance for up to two years, will be forgiven if the homeowner stays in the house for five years.

Troubled borrowers will be able to apply for the Emergency Homeowners Loan Program by the end of the year. They must be at least three months behind in their payments, but have a reasonable likelihood of being able to resume payments within two years. And they must have suffered at least a 15% drop in income, but have been able to afford their mortgage before their income loss.

Also, the property must be their principal residence and they cannot own a second home. And they must live in Puerto Rico or one of the 32 states not receiving federal assistance through the Hardest Hit Fund, which gave 18 states more than $4 billion to come up with programs to help the unemployed and underwater.

The emergency loan program is built on a similar initiative in Pennsylvania, which was created in 1983. That effort, which is funded by the state, provides loans of up to $60,000 for up to three years. It has distributed $470 million on behalf of more than 44,000 homeowners since inception and boasted an 80% success rate in preventing foreclosure.

The federal program, however, is relatively small. Congress gave the Housing Department $1 billion to spend, meaning it will help at least 20,000 people. But that's just a small fraction of those who need assistance.