SPECIAL MORTGAGE FORBEARANCE FOR UNEMPLOYED HOMEOWNERS: TEMPORARY PROGRAM CHANGES

Trendsetters, this week we are going to continue our discussion on foreclosure avoidance options for unemployed homeowners.  This past week, there have been some modifications to the FHA forbearance Program and the Home Affordable Unemployment Program that I must share with you!

The temporary program changes are a result of the increased amount of time that the unemployed have been out of work.  According to Shaun Donovan, U.S. Housing and Urban Development Secretary, 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 months.  Based on this information, it is evident that the current guidelines granting a three or four month forbearance are inadequate for the majority of unemployed homeowners.

In response to the need for additional assistance, on July 7, 2011, the Obama Administration announced changes to the Federal Housing Administration (FHA) policy that will require lenders to extend the forbearance period for unemployed homeowners to 12 months.  This modification in policy will also extend the forbearance period for lenders participating in the Making Home Affordable (MHA) wherever possible under regulator and investor guidelines.  These changes are intended to set a standard for the mortgage industry to provide more vigorous assistance to unemployed homeowners during this time of economic downturn. 

Below are the temporary modifications to the unemployment special forbearance as per the press release HUD No. 11-139

FHA TYPE 1 SPECIAL FORBEARANCE TEMPORARY PROGRAM CHANGES

• FHA’s FORBEARANCE EXTENSION WILL BECOME EFFECTIVE ON AUGUST 1, 2011 AND EXPIRE ON AUGUST 1, 2013
• MORTGAGE SERVICERS WILL HAVE 60 DAYS FROM AUGUST 1 TO IMPLEMENT THE EXTENSION

FHA TYPE 1 SPECIAL FORBEARANCE PROGRAM ELIGIBILITY CHANGES

• REMOVAL OF UPFRONT BARRIERS TO PARTICIPATE IN THE PROGRAM
• EXTENSION OF THE MINIMUM FORBEARANCE PERIOD FROM FOUR MONTHS TO TWELVE MONTHS

MORTGAGE SERVICER REQUIREMENTS

• ALL FHA APPROVED SERVICERS MUST PARTICIPATE IN FHA’S LOSS MITIGATION PROGRAM, WHICH INCLUDES THE SPECIAL FORBEARANCE PROGRAM
• FHA WILL REEMPHASIZE THE REQUIREMENT THAT ALL LENDERS CONDUCT A REVIEW AT THE END OF THE FORBEARANCE PERIOD TO EVALUATE THE BORROWER FOR ALL APPLICABLE FORECLOSURE ASSISTANCE PROGRAMS, STARTING WITH EXTENDED FORBEARANCE, AND NOTIFY THE BORROWER IN WRITING WHETHER OR NOT HE/SHE QUALIFIES FOR ANY AVAILABLE OPTION.
• IF THE BORROWER DOES NOT QUALIFY FOR ANY FORECLOSURE ASSISTANCE OPTION, THE LENDER MUST PROVIDE THE BORROWER WITH THE RASON FOR DENIAL AND ALLOW THE BORROWER AT LEAST SEVEN CALENDAR DAYS TO SUBMIT ADDITIONAL INFORMATION THAT MAY IMPACT THE SERVICER’S EVALUATION.

REASONS FOR DENIAL
REASONS FOR DENIAL COULD INCLUDE, BUT ARE NOT LIMITED TO:

• THE DELINQUENCY EXCEEDS 12 MONTHS WORTH OF PRINCIPAL, INTEREST, TAXES AND INSURANCE (PITI) INSTALLMENTS
• THE BORROWER IS UNABLE TO MAKE THE PARTIAL PAYMENT
• THE BORROWER HAS QUALIFIED FOR A STANDARD FORECLOSURE ASSISTANCE OPTION

TERMINATION OF SPECIAL FORBEARANCE
THE SPECIAL FORBEARANCE PLAN WILL CONTINUE UNTIL IT ENDS UNLESS ONE OF THE FOLLOWING CONDITIONS OCCURS:

• THE BORROWER ABANDONS THE PROPERTY
• THE BORROWER ADVISES THE MORTGAGE COMPANY THAT HE/SHE WILL NO LONGER BE SEEKING EMPLOYMENT OR WILL NOT HONOR THE TERMS OF THE FORBEARANCE AGREEMENT
• THE BORROWER ALLOWS FORBEARANCE PAYMENTS TO BECOME 60 DAYS PAST DUE AND UNPAID
• THE BORROWER FINDS A JOB AND THE LOAN IS REINSTATED

HOME AFFORDABLE UNEMPLOYMENT PROGRAM (UP) PROGRAM CHANGES

• ALL MORTGAGE SERVICERS PARTICIPATING IN THE ADMINISTRATIONS MAKING HOME AFFORDABLE PROGRAM (MHA) WILL BE REQUIRED TO EXTEND THE MINIMUM FORBEARANCE PERIOD FROM THREE MONTHS TO TWELVE MONTHS, WHENEVER POSSIBLE SUBJECT TO INVESTOR AND REGULATOR GUIDANCE. 
• FORBEARANCE UNDER UP WILL BECOME AVAILABLE TO BORROWERS WOR ARE SERIOUSLY DELINQUENT (MORE THAN THREE MONTHS)

To verify eligibility to participate in these programs, you can contact the following resources:

• Your mortgage company
• FHA National Servicing Center - 877-622-8525
• Homeowner’s HOPE Hotline - 888-995 HOPE

HELPFUL TIPS..

• REMEMBER TIME AND EDUCATION ARE THE KEY FACTORS TO HELPING YOU AVOID FORECLOSURE
• SEEK HELP AT THE FIRST SIGN OF DISTRESS…WAITING ONLY LIMITS YOUR OPTIONS
• BEWARE OF SCAMS…FORECLOSURE PREVENTION SERVICES ARE FREE! EVEN REALTORS’ ARE PAID BY THE LENDER FOR SUCCESSFUL SHORT SALE TRANSACTIONS!

For additional information or to schedule a FREE consultation, contact us today! DON’T LET TIME RUN OUT!

TAMMIE SELDON
DISTRESSED PROPERTY EXPERT
ATLANTA PROPERTY SHOPPE AT KELLER WILLIAMS REALTY
OFFICE: 404-419-3696
FAX: 678-668-8060
WEBSITE: WWW.ATLANTAPROPERTYSHOPPE.COM
WEBSITE: WWW.MYLIFEWITHOUTFORECLOSURE.COM
EMAIL: TAMMIE@ATLANTAPROPERTYSHOPPE.COM
TWITTER: @ATLPROPERTYSHOP