By July 1, 2010 all mortgage service providers participating in the Making Home Affordable Program will offer extra help for homeowners struggling to make their monthly mortgage payments because of unemployment. The Unemployment Program will offer homeowners a forbearance period to temporarily reduce or suspend their monthly mortgage payments while they seek re-employment.
The minimum forbearance period is three months, although a mortgage service provider may extend it depending on the investor and regulator guidelines. If a homeowner becomes re-employed in that time, the forbearance period will end and the homeowner will be evaluated for a mortgage modification under the Making Home Affordable Program. Unemployment benefits will no longer qualify as income for the mortgage modification program.
During the forbearance period, a homeowner’s monthly mortgage payment must be reduced to no more than 31 percent (or less) of their gross monthly income. The service provider can decide to temporarily suspend payments in full. The payment amount and due dates will be decided by the service provider depending on investor and regulator guidelines.
To qualify, a homeowner must meet the following eligibility criteria:
- The mortgage must be a first lien mortgage, originated on or before January 1, 2009, and the unpaid principal balance must be equal to or less than $729,750 for a one-unit property.
- The property must be the homeowner’s principal residence.
- The mortgage has not been previously modified through a Home Affordable Modification.
- The homeowner was ineligible for a Home Affordable Modification.
- The homeowner is either behind on payments (but not by more than three consecutive months) or it is reasonably foreseeable that the homeowner will fall behind.
- The total monthly mortgage payment is greater than 31 percent of the homeowner’s gross monthly income. If the payment is less, it is up to the service provider’s discretion if they will offer the program to the homeowner.
- The homeowner will be unemployed at the start of the forbearance period, and is able to document this because they will be receiving unemployment benefits in the month the forbearance period begins (even if the benefits expire before the forbearance period ends).
A mortgage service provider may require that, based on investor and regulator guidelines, homeowners have received at least three months of unemployment benefits before they begin a forbearance period.
There is no cost to apply to the Unemployment Program, although late charges may accrue while the homeowner is being evaluated for the program or in the program. A mortgage service may not collect late charges from the homeowner while they are still in the forbearance period.
Services may not initiate foreclosure proceedings or conduct a foreclosure sale while a homeowner is being evaluated for the Unemployment Program or in the forbearance period.
To determine if you qualify for the Unemployment Program, contact your mortgage sservice provider. You should learn your eligibility within ten days of submitting complete documentation to your service.
If you have any questions after speaking with your service provider, or need assistance applying to the program, call 1-888-995-HOPE (4673) to speak with a HUD-approved housing counselor for free.