Programs to Help After Foreclosure

Programs to Help After Foreclosure
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Homeowners who have lost their homes through foreclosure can find help getting back on track through federal and community-based organizations. The U.S. Department of Housing and Urban Development, or HUD, has provided funding for counseling agencies across the country to help homeowners determine what the plan of action is after foreclosure. Homeowners can find a HUD-approved housing counselor on the HUD website.

Transition Assistance

States that had a 20 percent decline in property value combined with high unemployment rates received funding from the U.S. Department of Treasury to help distressed homeowners. Homeowners who need to secure new housing can apply for transition assistance through their local housing finance agency. Financial aid can be used toward rent, security deposits and moving expenses. The money is paid directly to the third party. To qualify for help, the homeowner's income cannot exceed 120 percent of the area's median income.

Housing Counselor

If you have a foreclosure in your credit history, you will not be able to purchase another home for at least three years from the time of the foreclosure. A HUD-approved counselor can help you repair your credit after the foreclosure. If you are in debt, a credit counselor can negotiate with your creditors to get interest rates lowered. A counselor can also help you create a budget for your monthly expenses. She can devise a financial plan that will get you on the road to recovery.

Lease Purchase

Some non-profit agencies across the country are implementing lease-purchase programs. Non-profits will buy a foreclosed or abandoned home and rehabilitate it. Eligible participants will be required to have a good work history and enough income to afford to rent the home. Credit will not be evaluated, because the renter will be re-establishing credit during the lease term. A portion of the tenant's monthly rent will be put away in a savings account. This money will be used for down payment and closing costs once the tenant is ready to purchase the home.

Neighborhood Stabilization Program

The Neighborhood Stabilization Program, or NSP, helps community-based organizations purchase foreclosed homes. These homes are then re-sold at an affordable price to qualified low-to-moderate-income families. The purpose of the program is to keep blight from overcoming a neighborhood. The homebuyer's income cannot exceed 120 percent of the area's median income to qualify for an NSP home. The latest round of NSP funding was provided in 2010 through the Dodd–Frank Wall Street Reform and Consumer Protection Act.