More Mortgage Help for Unemployed Homeowners
With the foreclosure count still mounting; the Obama Administration has decided to require
mortgage lenders to take part in a program offering mortgage relief for unemployed homeowners.
Unemployed homeowners whose loans are backed by the FHA will now be granted twelve months of forbearance, if they qualify. At the end of the grace period, borrowers will still have to pay the full balance on their loans.
The Obama Administration is requiring all banks that collect on
FHA backed loans comply with their relief plans. They have also decided to put pressure on loan lenders who take part in the Home Affordable Modification Program.
The foreclosure crisis was sparked by an onslaught of adjustable-rate loans that went bad. Foreclosures will continue as struggling and unemployed homeowners, hurt by the entire financial downturn, fight to stay in homes that have drastically declined in value.
Housing officials are hoping that the changes can help slow the landslide and keep thousands of borrowers in their home.
Last year 17,000 unemployed borrowers were offered forbearance on their mortgage loan. Approximately 3,500 borrowers fall behind on mortgage payments every month. One of the solutions the HAMP offers is a three-month break from mortgage loan payments for struggling homeowners. Since last August, this aid has been offered to over 10,000 American homeowners.
The Obama Administration has already provided $7.6 billion for housing relief for 18 states, including
Florida and California. Many of these states have used the money to offer struggling homeowners "bridge" loans to help them stay in their homes.
A stipulation in the Dodd-Frank financial-overhaul will provided borrowers in 27 states with over $1 billion in interest-free loans to help them make mortgage payments.
While the new plan is focused on the government-run FHA, Fannie Mae and Freddie Mac, now also under government control, will not be forced to take part in the new plan. These firms, however, already offer their own relief products.
By: Javi Calderon
