With millions of homeowners still having difficulties catching up to their mortgage payments, the federal government continues to look for ways to stem the tide of foreclosures. The latest effort provides loans of up to $50,000 that some homeowners will never have to repay.

The Emergency Homeowners Loan Program is targeted at people who are not terribly far behind on their payments but who need that short-term boost to get them back on track with making payments.

From SmartMoney.com:

Rolled out by HUD and the nonprofit housing advocacy group NeighborWorks America, the program is making loans with far better terms than anything on offer at a local bank. The loans are interest-free. Payments go directly to the lender for a portion of the borrower’s monthly mortgage, including missed payments or past due charges. And when the assistance period — which runs for up to two years — ends, 20% of the loan is forgiven with each passing year. In other words, for qualified borrowers who stay in their home for at least five years after the assistance period and who don’t fall behind on their mortgage again, this money doesn’t have to be paid back.

That five-year stipulation is what gives pause to some critics of the program. If the homeowner sells the house before the end of that period — or once again falls behind on payments — they are responsible for paying back the remainder of the federal loan, meaning they could be even deeper in debt than they were before the loan.

The other criticism of the $1 billion program is that it only plans to offer loans to around 30,000 homeowners, less than 1% of the people that are currently behind on their mortgage payments.

But a NeighborWorks rep tells SmartMoney that, while it’s not significant to a lot of people, at least it can do something for a few of them: “If you are one of those 30,000 people, I think you should be very excited to get this help.”

If you’re interested in the program, applications are being accepted through July 22. Go to the NeighborhoodWorks site for more information.

More Money for Struggling Homeowners [SmartMoney.com]

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