U.S. mortgage servicers must extend unemployed homeowners' forbearance period to 12 months from three months following new order from FHA, Treasury Dept.
July 11, 2011
– Unemployed homeowners in the U.S. will now have a forbearance period of 12 months following new requirement set by Federal Housing Administration (FHA) and U.S. Treasury Dept., HousingWire reported July 7.
Servicers working for the Unemployment Program under the Home Affordable Modification Program must extend the forbearance period to 12 months from the current three months.
According to the secretary of the Dept. of Housing and Urban Development (HUD) Shaun Donovan the new rule will help the country’s unemployed borrowers from losing their home. Of the U.S.’s unemployed about 60% have not worked for more than three months while 45% have not worked for more than six months, said Donovan. Every month about 3,500 borrowers fall into 90-day delinquency because of the lack of income, reported HousingWire.
This new rule follows several funding initiatives for unemployment assistance including the US$1 billion in interest free loans for unemployed borrowers that were released in June by HUD. The U.S. Treasury Dept. also provided US$7.6 billion to fund state unemployment programs under its Hardest Hit Funding program. Additionally, more unemployed borrowers will be able to qualify for the FHA Special Forbearance Program when the Obama administration removes some hurdles.
The primary source of this article is HousingWire, Plano, Texas, on July 7, 2011.