HUD Gives Jobless Homeowners Extra Time to Catch Up
The Department of Housing and UrbanrnDevelopment (HUD) has modified the existing policies related to two of its assistance programs to give unemployed homeowners additional time to obtain a job beforernlosing their homes. The changes impactrnFHA requirements and the Making Home Affordable (MHA) program.</p
The changes to the FHA’s SpecialrnForbearance Program will require its servicers to increase the minimumrnforbearance period for qualified homeowners from four months to 12 and servicersrnparticipating in the MHA Unemployment Program (UP) to extend the currentrnminimum forbearance period from three months to 12 where it is possible underrnregulator and investor guidelines. </p
Forbearance is a strategy designed to give distressed borrowers extra time to catch up on their payments before the lender forecloses. According to HUD the changes are intended to set a standard for thernindustry as a whole for dealing with unemployed homeowners. </p
U.S.rnHousing and Urban Development Secretary Shaun Donovan said. rn”Today, 60 percent of the unemployed have been out of work for more than threernmonths and 45 percent have been out of work for more than six. Providingrnthe option for a year of forbearance will give struggling homeowners arnsubstantially greater chance of finding employment before they lose theirrnhome.”</p
In addition to extending the SpecialrnForbearance Program forbearance period, HUD restated its requirement that FHArnapproved servicers conduct a review at the end of the forbearance period to seernif further help might be available through additional assistance programs. If the borrower does not qualify forrnadditional assistance the servicers must provide the borrower a reason andrnallow the borrower at least seven additional days to submit supportive information.</p
The Administration has tailored several otherrnprograms specifically targeted to assist unemployed homeowners. The Hardest Hit Fund is providing $7.6rnbillion to the 18 states and the District of Columbia that have had the doublernwhammy of high unemployment and steep home price declines and thernEmergency Homeowner Loan Program is providing $1 billion to the other 32 statesrnto assist homeowners who have had a loss of income through unemployment orrnunderemployment or because of medical reasons with short-term loans to use for mortgagernpayments.
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