Freddie Mac Offers Help To Unemployed Borrowers
Borrowers out of work may be eligible for up to 12 months of loan forbearance
Posted on January 11, 2012 by Matt.
With millions of Americans struggling to make ends meet due to unemployment, the problems of the housing industry are not going away. Simply put, many homeowners cannot afford their mortgage payment due to the lack of a monthly paycheck, and foreclosures and short sales continue to flood the marketplace. This has caused a downward pull on home values that will not show signs of increasing until the large inventory of distressed real estate on the market begins to subside; on the San Clemente real estate market, 88 of the 287 current active listings are distressed homes and condos, which is almost 31% of the total inventory. Fortunately, the government seems to be growing more and more proactive when it comes to aiding underwater homeowners, and a recent move by Freddie Mac is another step in the right direction.
According to a press release on Freddie Mac's website ("Freddie Mac Now Permits Up To 12 Months Forbearance To Unemployed Borrowers"), unemployed borrowers with loans owned or guaranteed by Freddie Mac may be eligible for up to 12 months of forbearance on the loan. Previously, Freddie Mac allowed loan servicers to grant up to 3 months of forbearance with no payment and no prior approval by Freddie, or up to 6 months at a reduced payment with prior approval. According to the release, mortgage servicers may now give up to 6 months of forbearance to unemployed borrowers without prior approval and an additional 6 months with Freddie Mac approval. The new rules will take effect on February 1st, and current delinquent borrowers in a short-term forbearance plan may be evaluated for the new policy's extended forbearance terms.
Forbearance is one of the ways that a borrower has to avoid default and foreclosure, and the longer terms offered by Freddie Mac gives an unemployed borrower more time to get back on their feet and catch up on their delinquent payments. The article states that the latest statistics show that nearly 10% of delinquencies on Freddie Mac mortgages were related to unemployed borrowers, so this policy can really help a lot of people. This is obviously a program that you would have to apply and qualify for, so definitely check out Freddie Mac's website or speak to your lender for further details and policy specifics.