The Obama administration offered up a new foreclosure prevention plan that includes help for the unemployed. About 11 million homeowners are underwater on mortgages. Loans are overdue, and the aid is aimed at keeping some borrowers from losing their homes.
Many Homeowners Still Struggle with Mortgages
The Making Home Affordable Plan (HAMP) has hit bumps from the beginning, and not as many homeowners have been helped as the government had hoped. The revised plan makes another attempt to help 3 million to 4 million homeowners by the end of 2012. Details of the plan include:
- Incentives will be offered to mortgage lenders to write down the principal on mortgages.
- The Federal Housing Administration (FHA) plans to refinance some mortgages if the balance is written down to 115% of the property value or less. The refinanced mortgage payments shouldn't be more than 31% of a homeowner's income.
- People who are unemployed are to get three to six months of forbearance on their mortgage payments. During that time their mortgage payments must total no more than 31% of their income. After the forbearance period, homeowners may be considered for a loan modification.
- Borrowers who don't qualify for a modification after the forbearance period are to be offered alternatives such as a short sale or deed-in-lieu of foreclosure.
- Homeowners may be able to get help with first and second liens. Mortgage lenders may receive incentives to forgive all or a portion of second liens.
- Mortgage lenders and loan servicers can't sell a distressed borrower's home while he is being considered for a HAMP modification.
Even if you didn't think your qualified for the government's rescue plan before, check with your mortgage lender or loan servicer to see if you can get help under the revised guidelines.