By Rita R. Robison, Consumer Specialist
For consumers who are unemployed and worried about paying their mortgages, there’s good news.
Yesterday, the Obama Administration announced adjustments to Federal Housing Administration requirements that will require servicers to extend the forbearance period for unemployed homeowners from four months to 12 months.
The changes also require servicers to remove upfront hurdles to make it easier for unemployed borrowers to qualify.
"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 in a statement. "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."
In addition to extending the forbearance period and removing the up-front hurdles for borrowers, 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 doesn’t 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.