The Obama administration recently made an announcement that starting August 1, the FHA or Federal Housing Administration will allow unemployed homeowners to miss mortgage payments from the current time frame of 3 months to a full year. This will allow qualified homeowners to concentrate on seeking employment without the worry of foreclosure. The foreclosure process will begin after the grace period of 12 months.
The extended grace period will only apply to FHA-backed loans, which are usually granted to low and middle income borrowers. The officials said that about 3,500 FHA-backed homeowners per month will be eligible.
Missed payments during the forbearance period, plus interest, will be added on to the cost of each home loan.
Thousands of Americans have lost their jobs due to an economic recession. According to the US Department of Labor, the unemployment rate for the month of June is at 9.2%. Unfortunately this has occurred in many states and severely impacted different areas of the country. As a result, people lose their homes because they cannot afford to live in them anymore. "Today, 60 percent of the unemployed have been out of work for more than three months and 45 percent have been out of work for more than six. Providing the option for a year of forbearance will give struggling homeowners a substantially greater chance of finding employment before they lose their home,” Development Secretary Shaun Donovan said. Last year, roughly 17,000 homeowners received a government-supported delay on their mortgage payments.
Development Secretary Shaun Donovan hopes this move will compel Fannie Mae and Freddie Mac to follow suit and make the time allowance extension as well.
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