Unemployed borrowers with an FHA loan will not be required to make any full payments for at least 12 months – and possibly more – under a new HUD program unveiled Thursday morning.
The current minimum is four months – but only if the borrower can prove to the FHA servicer that he has what the government calls a “significant” likelihood of repaying the loan.
FHA loans account for 10% of the $9.6 trillion of outstanding mortgages in the U.S.
In a teleconference with reporters, HUD secretary Shaun Donovan noted that the forbearance period can last up to 24 months or longer, but only if the borrower is making some type of partial payments. (Forbearance is calculated based on how large those partial payments are.)
Secretary Donovan noted that these changes to the government’s ‘Making Home Affordable Program’ only apply to FHA loans but he hopes the effort “will push the broader market to extend” their forbearance to the other loan types.
Each month, roughly 3,500 FHA loans for borrowers who lose their jobs become 90-days delinquent.
To date, FHA has been responsible for 900,000 loss mitigation cases, HUD said.
The new effort was spurred by President Obama who believes the government has fallen short of doing more to help struggling home owners.
