Mortgage Modification Plan For Unemployed Begins July 1st

President Obama’s administration’s foreclosure prevention efforts have been work in progress as we continue to deal with issues in the housing market. This past March, in reaction to the fact that on top of sinking home prices, unemployment issues have also hurt borrowers’ ability to repay their mortgages, a mortgage assistance program for the unemployed was announced. That plan will go into effect very shortly, with a start date of July 1, 2010. Under the new plan servicers would be required to offer forbearance plans to all qualified jobless borrowers for at least three and as long as six months. Under the plan, the unemployed could see their monthly payments reduced to 31% of income or less or even suspended entirely.
Borrowers must meet HAMP eligibility requirements as well as submit evidence that they are receiving unemployment benefits. They must also be in their first 90 days of delinquency.
After the assistance period ends, homeowners would be evaluated for a loan modification or foreclosure alternatives, such as short sales.
This plan is as we mentioned just around the corner, but we will have to wait to see how effectively this new initiative is put into action.