Emergency Housing Assistance Act of 1985

Emergency Housing Assistance Act of 1985 - Amends the Emergency Housing Act of 1975 to direct the Secretary of Housing and Urban Development to make emergency mortgage relief payments to mortgagees on behalf of certain delinquent mortgagors in a district when, for three consecutive months, the amount of delinquent mortgage loans exceeds a specified percentage of the amount of all loans accounted for in the mortgage delinquency series maintained by the Federal Home Loan Bank Board for such district or the nation. Provides for the discontinuation and reinstitution of such assistance program depending on such delinquency rate condition. Directs the Secretary to notify the mortgagees in a district of the institution or reinstitution of such a program in that district.

Lists the conditions for assistance eligibility, which include requirements that: (1) the mortgage is not federally insured under the Housing Act of 1949; (2) the mortgagor has suffered a substantial reduction in income, other than as a result of repeated or felonious misconduct, which renders the mortgagor unable to correct a mortgage delinquency or to resume full mortgage payments; (3) the average aggregate annual income of the mortgagor and family members residing with the mortgagor does not exceed a specified amount, or the aggregate value of the assets, with certain exceptions, of such mortgagor and family members does not exceed $10,000; (4) the mortgagor has cooperated with any attempt by the mortgagee to establish a reasonable plan to correct the mortgage delinquency without assistance under this Act; and (5) the Secretary has determined that assistance is necessary to avoid foreclosure and that it is likely that the mortgagor will be able to resume full mortgage payments within 36 months and pay the mortgage in full by its maturity date.

Requires each mortgagee, at least 30 days before instituting any foreclosure proceeding, to assist the mortgagor involved in applying for assistance under this Act, unless the mortgagor waives such assistance. Prohibits a mortgagee from instituting foreclosure proceedings until it receives notice of the Secretary's decision on such application. Allows a mortgagor to apply for assistance after foreclosure proceedings have begun, in which event such proceedings shall be stayed pending the Secretary's decision. Declares that failure to comply with these provisions shall be the basis of an action to enjoin a foreclosure. Requires an application to contain the mortgagee's certification that at least three full monthly payments are past due and that the mortgagee has extended a specified amount of voluntary forebearance.

Declares that assistance payments shall: (1) not exceed amounts necessary to supplement the amounts the mortgagor is able to contribute; (2) not be less than the amount necessary to ensure that the total monthly housing expense of the mortgagor (which excludes the maintenance and utility cost for certain luxury appurtenances) does not exceed 38 percent of his or her net effective income; and (3) be provided for a period not to exceed 18 months plus any period of delinquency, with an 18-month extension if necessary to avoid foreclosure. Directs the Secretary to establish certain procedures for ascertaining the mortgagor's financial circumstances to determine whether such payments should be adjusted or terminated.

Declares that all assistance payments shall be secured by a lien on the property and repayable on terms prescribed by the Secretary, with certain restrictions. Allows a mortgagor to receive assistance under this Act more than once, except that payments may not be provided for a mortgagor for more than an aggregate of 36 months. Sets forth the authority of the Secretary to recapture such assistance.

Directs the Secretary to: (1) provide homeownership counseling to persons assisted under this Act; (2) approve or disapprove an application for assistance within 45 days; (3) seek a reasonable distribution of assistance among participating districts; and (4) consider the rates of residential mortgage foreclosure and unemployment in units of local government and whether such units qualify for urban development action grants in providing assistance under this Act.

Creates the Homeowners Emergency Relief Fund to be available to carry out this Act.

Authorizes FY 1986 appropriations and limits expenditures for assistance under this Act.

Requires the Secretary and certain Federal agencies which supervise financial institutions to: (1) encourage such institutions to exercise forebearance with respect to residential mortgages; and (2) waive or relax limitations pertaining to operations of such institutions or mortgagees with respect to mortgage delinquencies. Directs the Federal home loan banks, the Federal Reserve banks, and the National Credit Union Administration to give special consideration to advance, discount, or credit applications of the institutions or borrowers that have exercised forebearance in residential mortgage foreclosures.

Requires the Secretary to report to the Congress every 90 days on: (1) the rate of delinquencies and foreclosures in various housing markets; (2) the prospects of voluntary forebearance by mortgagees in such areas; (3) Government actions to encourage such forebearance and to provide assistance under this title; and (4) the default status of mortgages on multifamily properties with recommendations on curing and avoiding such defaults.

Directs the Secretary to study and report on the use of alternative mortgage delinquency series under this title.

Repeals title I (Emergency Mortgage Relief) of the Emergency Housing Act of 1975.