WORLD
Mortgage aid for unemployed expanded
Baku, July 8 (AZERTAC). The Obama administration will require mortgage companies to extend more generous mortgage relief to help certain unemployed borrowers from losing their homes to foreclosure.
Under policy changes announced Thursday, mortgage companies that collect payments on loans backed by the Federal Housing Administration will be required to offer 12 months of forbearance for qualified unemployed borrowers. Currently, out-of-work borrowers with these loans can receive a minimum of four months without mortgage payments.
Firms that participate in the Obama administration`s Home Affordable Modification Program will also be pressed to offer up to 12 months of forbearance for unemployed borrowers, though that effort could be stymied by regulatory or contractual rules.
The foreclosure crisis was initially driven by adjustable-rate mortgages that were resetting to sharply higher payments, but over the past three years, far more homeowners have faced foreclosure because they have lost their jobs or seen their income fall. Many of those borrowers can`t easily sell their homes if they get in trouble because they owe more than the properties are now worth.
Borrowers who receive loan forbearance, where principal and interest payments are temporarily suspended, will ultimately have to pay back the past-due balance after the forbearance period ends.
The Obama administration has separately committed $7.6 billion in funds from the $700 billion Troubled Asset Relief Program to target housing relief in 18 of the “hardest hit” states. Most states have used some of that money to provide bridge loans so that unemployed borrowers can make mortgage payments.
A separate program, funded with $1 billion through the Dodd-Frank financial-overhaul law, allows unemployed borrowers in 27 other states to receive interest-free loans to help make mortgage payments worth up to $50,000 for up to two years. Applications for that program are due July 22.