Unemployed Homeowners May Qualify for Forbearance

Unemployed homeowners who have been unable to refinance mortgages may be eligible for forbearance through a new program launched by the government. Only unemployed homeowners who have not had a mortgage modified through the government's Making Home Affordable Plan can be considered for assistance.

Mortgage Payments Reduced or Suspended

The Home Affordable Unemployment Program (UP) allows the unemployed to have mortgage payments reduced or suspended for a period of at least three months. You must request help through the program before you've missed three full mortgage payments. Other requirements include:

• You must be able to document that you receive unemployment benefits.
• You may be required to have received unemployment benefits for up to three months before the forbearance period begins.
• You must be delinquent on your mortgage or very likely to default soon.
• Loans must be originated on or before Jan. 1, 2009.
• The unpaid balance of your mortgage can't be any higher than $729,750 for a single-family home.
• The forbearance is only for a first lien mortgage on your principal residence.

Mortgage Modifications

If you are approved for help through the program, you could later receive an extension of the forbearance period if your mortgage servicers agree to it. Only loan servicers who participate in HAMP can offer the program for the unemployed. If you find employment during your forbearance period, you may be evaluated for a loan modification through HAMP.

Other Programs to Avoid Foreclosure

Homeowners who are not eligible for help through the unemployment program may be considered for other alternatives that can help them avoid foreclosure. Among the assistance available is the Home Affordable Foreclosure Alternative (HAFA), which facilitates short sales, or a deed-in-lieu of foreclosure, in which you transfer the deed to the property to your mortgage lender and have mortgage debt forgiven.