July 8, 2011 (Shirley Allen)
Recognizing that the current economic hardships have made current forbearance programs inadequate, the Obama Administration announced adjustments to the Federal Housing Administration’s (FHA) Special Forbearance Program that will require mortgage servicers to extend the forbearance for FHA borrowers who qualify from four to 12 months.
In addition, all mortgage servicers participating in the Making Home Affordable Program’s (MHA) Unemployment Program (UP) will be required to extend the minimum forbearance program from three to 12 months for all eligible unemployed homeowners, whenever possible, subject to investor and regulator guidance for each mortgage loan. Forbearance under UP will also now be available to borrowers who are seriously delinquent.
“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. “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.”
The FHA also reemphasized its requirement that servicers conduct a review at the end of the forbearance period to evaluate the borrower for all additional, applicable foreclosure assistance programs and notify the borrower in writing whether or not he/she qualifies for any other available option.
If the borrower does not qualify for any foreclosure assistance option, the servicer must provide the borrower with the reason for denial and allow the borrower at least seven calendar days to submit additional information that may impact the servicer’s evaluation.
The new forbearance guidelines become effective on August 1st, 2011, and expire two years from the effective date. Servicers will have 60 days from August 1st to implement the new guidelines.
Tags: HUD, unemployed, forbearance, FHA, mortgage servicers, Special Forbearance Program, Unemployment Program, seriously delinquent
Source:
HUD
