Homeowners at risk of foreclosure in 32 states can get emergency financial aid from the federal government, but they have to act fast. Deadlines are tight, and homeowners are already flooding the program with inquiries.

Within days of the program’s announcement last week, roughly 600 people had contacted CredAbility, a credit counseling agency in Atlanta, to ask for details, a spokesman says. CredAbility is one of 22 agencies chosen to administer the program by the federal government and NeighborWorks America, a nonprofit housing organization.

As part of the Dodd-Frank Act, Congress set aside $1 billion to help struggling homeowners.

If they qualify, homeowners can get interest-free loans to pay a portion of their monthly mortgage, as well as back payments and legal fees, for up to $50,000 or two years, whichever comes first. The loans do not have to be repaid, as long as the homeowner continues making mortgage payments on time for five years. The program is expected to help from 20,000 to 30,000 distressed homeowners.

The program, known as the Emergency Homeowners’ Loan Program, is available to homeowners ineligible for the larger, $7.6 billion “hardest hit” fund, which provided assistance to 18 states that absorbed the worst of the housing crisis.

There are some hoops to jump through though. To qualify, homeowners must be at least three months delinquent on their home loans and have suffered at least a 15 percent income reduction from a job loss due to economic or medical reasons. Other requirements, like income limits, also apply.

To make sure the emergency funds are used up by Sept. 30, the end of the federal fiscal year, there are tight deadlines to meet. Homeowners must submit preliminary applications for the funds by July 22, less than four weeks away. The counseling agencies will screen the applications and submit the names of eligible homeowners to NeigborWorks for review. Because demand is expected to outstrip available funding, finalists likely will be selected by lottery.

Homeowners whose applications are chosen by the lottery will be contacted and given a short period of time, possibly just five days, says Michelle Jones, senior vice president of counseling at CredAbility, to fill out a full application and provide supporting documentation of their eligibility. The list of required documents includes nine separate items, like a letter terminating your employment and a notice of delinquency from your lender. If homeowners fail to meet the deadline, the next name on the list will be contacted.

“It’s a short timeline,” says Ms. Jones, so homeowners shouldn’t wait until they receive news that their application is selected via the lottery to begin gathering their paperwork.

To help make sure only those who are eligible make the first cut, the screening application asks if homeowners had been able to meet their mortgage payments before the job loss. The goal of the program is to help people who can be expected to resume making their payments once the economy improves and able to find work or their health improves. If they were having trouble paying their loan even when they were employed, they are unlikely to benefit from temporary assistance, Ms. Jones says.

But even if they aren’t likely to benefit from the emergency loans, the counseling agencies also can work with those applicants on possible alternatives.

The emergency program is available in the following states: Alaska, Arkansas, Colorado, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Oklahoma, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

The program is also offered in Puerto Rico. Five other states also have similar programs: Connecticut, Delaware, Idaho, Maryland, and Pennsylvania.

If you are applying for this program or have attempted to apply for similar ones in the past, please report your experience in the comments.

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