Losing employment has been a problem for those homeowners seeking help from the Making Home Affordable (HAMP) programs.
But starting August 1, 2010 (or sooner, according to anecdotal reports), unemployed borrowers might be able to get help from a new HAMP program, called Home Affordable Unemployed Program (or, UP).
Announced in mid-May, the Home Affordable Unemployed Program grants borrowers a forbearance plan during which regular monthly mortgage payments are reduced or suspended, according to Supplemental Directive 10-04. Borrowers will be evaluated for HAMP at the earlier of re-employment or 30 days prior to the expiration of the UP forbearance plan.
Lenders can simply tell borrowers not to make any payments for 90 days, or 3 months, and they can renew that forbearance for longer periods at their discretion.
"A borrower who is unemployed and requests assistance under HAMP must be evaluated for and, if qualified, receive an UP forbearance plan before the borrower may be considered for HAMP. For borrowers being considered for trial period plans with effective dates on or after July 1, 2010 [later modified to August 1, 2010], servicers may no longer consider unemployment insurance benefits as a source of income when evaluating borrowers for HAMP. For purposes of this Supplemental Directive, the term "borrower" includes any co-borrower."
Home Affordable Unemployed Program Eligibility Requirements
According to the directive, servicers are required to offer a Home Affordable Unemployed Program forbearance plan to a borrower who meets the following HAMP minimum eligibility criteria:
The mortgage loan is secured by a one- to four-unit property, one unit of which is the borrower's principal residence.
The mortgage loan is a first lien mortgage loan originated on or before January 1, 2009.
The current unpaid principal balance of the mortgage loan is equal to or less than $729,750.1
The mortgage loan is delinquent or default is reasonably foreseeable.
The mortgage loan has not been previously modified under HAMP and the borrower has not previously received an UP forbearance period.
Makes a request before the first mortgage lien is seriously delinquent (before three monthly payments are due and unpaid). A request for UP may be made by phone, mail or email. Servicers must document the date of the UP request in the servicing file and, within 10 business days, confirm the receipt of the request with the borrower via mail or return email.
Is unemployed at the date of the request for UP and is able to document that he or she will receive unemployment benefits in the month of the Forbearance Period Effective Date (defined below) even if his or her unemployment benefit eligibility is scheduled to expire before the end of the UP forbearance period
The servicer may, pursuant to investor or regulator guidelines, require a borrower to have received unemployment benefits for up to three months before the forbearance period will begin.
A borrower who has received unemployment benefits for less than the minimum time period required by the servicer may request consideration for an UP forbearance plan; however, the forbearance period will not begin until after the borrower has received unemployment benefits as required by the servicer.Servicers must have written procedures for determining when a borrower must be in receipt of up to three months of unemployment benefits and must consistently apply those procedures.
To be eligible for HAMP, a borrower's total monthly mortgage payment (principal, interest, taxes, insurance and association fees, if any) prior to the modification must exceed 31 percent of the borrower's gross income.
To streamline the delivery of unemployment assistance, a servicer may waive this criterion for UP forbearance plan eligibility. However, servicers are not required to offer an UP forbearance plan to borrowers whose total monthly mortgage payment is less than or equal to 31 percent of the borrower's monthly gross income, including unemployment benefits.
I heard from someone on my radio show this morning that lenders are beginning to offer the UP program to unemployed borrowers. It's worth calling your lender if you've lost your job and have been unemployed for at least 90 days to see if you can get some help.
Don't miss the comments: Are You In Loan Modification Hell: Join The Club, Loan Modification Hell: Income Requirements For New HAMP Rules, and Loan Modification Hell: The Horror Stories Continue.
If you're unemployed and received help from the HAMP unemployed program, please leave your comments, story and suggestions 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.