Unemployed? The New HAMP Loan Modification Program Might Help You Keep Your House
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The new Unemployed Program (UP) starts August 1, 2010, and it requires lenders to reduce or suspend payments for at least three months for eligible borrowers. It is at the lender’s discretion to extend the forbearance, and the program ends once the borrower gets a new job.
According to Supplemental Directive 10-04, mortgage servicers are required to offer an Unemployment Program forbearance plan to a borrower who meets the following criteria:
Your loan servicer can require that you receive unemployment benefits for three months before the forbearance period begins. And you won’t qualify if your total monthly mortgage payment is less than or equal to 31 percent of your monthly gross income, including unemployment benefits.
Also, servicers are not required to offer you the Unemployment Program if a household member who is not a borrower becomes unemployed, even if that income contributed to the mortgage payment.
In other words, if you’re the borrower but depend on income from your spouse, partner, parent, or child to make your payments and that person loses his or her job, you won’t qualify for the program.
You also won’t qualify if your mortgage, taxes, insurance, and homeowners’ association fee is equal to or less than 31 percent of your gross monthly household income, including unemployment insurance.
This new Making Home Affordable program was originally supposed to start on July 1, and I’m sure there will be any number of changes to the program before it really gets going. If there are changes, I’ll post them here.
Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.
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