White House Gives Unemployed Homeowners 1-Year Loan Repayment Relief

White House Gives Unemployed Homeowners 1-Year Loan Repayment Relief

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The Obama administration has announced it will require home loan servicers to extend the time allowing unemployed homeowners to forbear payment on their loans to 12 months.

The extension will apply to homeowners who have Federal Housing Administration (FHA) loans and to servicers participating in the Making Home Affordable Program (MHA).

The administration said it enacted the new guidelines to assist homeowners in the job-search process stay in their homes. The efforts are also part of an attempt to prevent further foreclosures while the unemployment rate remains above 9 percent.

“The current unemployment forbearance programs have mandatory periods that are inadequate for the majority of unemployed borrowers,” U.S. Housing and Urban Development Secretary Shaun Donovan said in announcing the requirements last week. “Today, 60 percent of the unemployed have been out of work for more than three months and 45 percent have been out of work for more than six. Providing the option for a year of forbearance will give struggling homeowners a substantially greater chance of finding employment before they lose their home.”

Additional forbearance help will also become available to borrowers who are seriously delinquent. Home ownership data from RealtyTrac indicate that lenders have foreclosed on more than 3.5 million homes since early 2007.

The government’s latest labor report showed that more than 45 percent of unemployed Americans have been out of work for more than six months.

These new requirements are the latest attempt by the White House to curb home losses. Donovan also emphasized HUD’s earlier requirement that every home-loan servicing company at the end of the forbearance period evaluate each borrower for all additional, applicable foreclosure assistance programs and to explain, in writing, whether the borrower qualifies for any other available option.

3 COMMENTS

  1. Well, I guess it's better than nothing but here in California, people are being laid off longer than that. Not to mention all the debt that builds up. Not much anyone can do though I guess when you have no form of paying anything what so ever so a year is great. Just hope that once everything is said and done, the family is back on their feet that they'll make a program designed to not fail like the current, balloon payment, no reduction adjustable loan modifications. Not sure what the point of that is??? California short sale

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