Freddie Mac Offers Help to the Unemployed
Earlier this month, Freddie Mac, mortgage giant, introduced a forbearance relief option for borrowers experiencing a hardship caused by unemployment. The plan will allow for a forbearance period of six months, which could be extended up to twelve months if borrowers meet certain requirements. Additionally, as part of the unemployment forbearance plan, the Home Affordable Modification Program (HAMP) has been revised to further assist distressed borrowers.
During the short-term, six-month forbearance program, Servicers will have the authority to either suspend or reduce unemployed borrowers’ monthly mortgage payments. Under the Single-Family Seller/Servicer Guide, if a homeowner remains unemployed after six months, the servicer must evaluate them for the extended forbearance program. This extended period may give a borrower up to an additional six months of relief. However, the Servicer must obtain written approval from Freddie Mac for the extended forbearance plan. Once a borrower begins working again, the forbearance program must terminate. At that point, the borrower must repay the delinquency either in full, with a pay-off amount, or through a repayment plan. If this isn’t possible, the borrower will be considered for options to pay it off.
Additionally, if a borrower who is already participating in a trial HAMP modification becomes unemployed and contacts their servicer for help, the servicer will be required to evaluate the borrower for the unemployment forbearance relief program. And borrowers who are participating in a trial HAMP modification but convert to an unemployment forbearance plan will be re-evaluated for a new HAMP trial modification at the end of the forbearance period. The borrower can then begin a new trial modification plan.
Freddie Mac is encouraging Servicers to begin implementing the unemployment forbearance relief options now, for borrowers who request assistance. However, as of February 1, 2012, Servicers will be required to evaluate homeowners for this alternative to foreclosure.
The full eligibility criteria for a borrower can be found in Section A65.26, Unemployment Forbearance, through Section A65.28, Extended Unemployment Forbearance, on Freddie Mac’s website by clicking here. Among some of the basic requirements are the following:
- the unemployment hardship must be current;
- the property must be the homeowner’s primary residence;
- the property must be occupied – it cannot be vacant or abandoned; and
- just as with HAMP, the borrower’s housing expenses must be greater than thirty-one percent of the borrower’s income.
It is important to keep in mind that this is for Freddie-Mac owned or guaranteed loans only. The homeowner will need to contact the servicer for assistance with this program. While this is meant to provide short-term help for those who have become unemployed, it can turn into a long-term solution. However, if after twelve months, a borrower still finds himself unemployed and having trouble making the mortgage payments, it may be necessary to look into other alternatives to foreclosure. The attorneys at Dellutri Law Group can help evaluate your situation and decide the best action for you. With experience in the areas of foreclosure defense, loan modifications, short sales, and Bankruptcy, we are well-equipped to help you through this difficult time. We are focused on making bad situations better. If you find yourself struggling through these tough economic times, as so many are, please give us a call. We will find a way to help.
This blog was written by Attorney Danielle Zemola of The Dellutri Law Group, P.A. Ms. Zemola defends homeowner in the foreclosure process and in the Bankruptcy Court.
