Bridge Loan Program For US Unemployed Dropped From Draft Bill

WASHINGTON (Dow Jones)--A $3 billion program to provide bridge loans for the unemployed to pay their mortgages was dropped from the latest draft of U.S. Congress' financial-overhaul bill.

Backers said the program is key to stabilizing the U.S. housing market because unemployment has eclipsed risky mortgages as the largest driver of foreclosures.

"We think responding to foreclosures driven by unemployment is not only important for families who don't want to lose their homes, but it's also critical for stabilizing the housing market," Gordon Whitman, the policy director for PICO, a network of faith-based community groups.

The loan program, which was approved by the House of Representatives in its version of the bill, would provide unemployed homeowners with low-interest loans of up to $50,000. The homeowners would have to repay the loan once they returned to work.

The concept comes from a similar program started in Pennsylvania during the 1980s that has provided net revenue to the state. Advocates for homeowners and the unemployed are pushing to reinsert the program into the final legislation.

The latest draft of the bill also drops a House-passed provision that would authorize an additional $1 billion for towns and cities to rehabilitate neighborhoods ravaged by foreclosures. And the draft omits another provision setting aside additional funds for counselors helping people avoid foreclosure. 

Read more about PICO's work to help unemployed homeowners >>

Please contact your Members of Congress and urge them to support help for unemployed homeowners in the final legislation.