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HUD SPECIAL FORBEARANCE INITIATIVE
The following is summarized from HUD News Release 02-104
WHAT IS THE HUD SPECIAL FORBEARANCE INITIATIVE?
HUD's Special Forbearance Initiative will permit lenders of Federal Housing Administration (FHA) insured mortgages to assist creditworthy borrowers who are behind in making mortgage payments because they are temporarily unemployed. This initiative and others are expected to help thousands of homeowners avoid losing their homes through foreclosure. Under the terms of the initiative, a lender may enter into a written special forbearance agreement with a borrower whose FHA insured mortgage is at least three months but not more than 12 months overdue, and whose loan is not in foreclosure at the time the agreement is executed.
WHO IS ELIGIBLE?
To be eligible, the borrower must have an FHA insured mortgage and:
- Have a good payment record and a stable employment history prior to this default
- Have a verifiable loss of income or increase in living expenses
- Be actively seeking employment, but have not received a commitment of re-employment at the time the lender is reviewing the borrower's financial information; and
- Be an owner-occupant, committed to occupying the property as a primary residence during the term of the special forbearance agreement
The special forbearance initiative will not be offered to borrowers who have repeatedly broken past informal or formal forbearance plans without good cause.
HOW DOES THE PROGRAM OPERATE?
The forbearance agreement allows eligible borrowers to postpone monthly mortgage payments for a minimum of four months. While there is no limit on the maximum number of months, at no time may the agreement allow the delinquency to exceed the equivalent of 12 monthly PITI - principal, interest, taxes and insurance - installments. HUD requires that the lender verify the borrower's employment status monthly and renegotiate the terms of the special forbearance plan when the borrower's status changes. HUD also requires the lender to verify that the property has no physical conditions that might adversely impact the borrower's continued use or ability to support the debt. A borrower will not be able to obtain a special forbearance if the property is in such a deteriorated condition that repairs drain the borrower's monthly resources.
HOW TO APPLY
Homeowners with an FHA insured mortgage can contact their mortgage lender.
For more information on foreclosure, see the e-Library paper “Foreclosure/Avoiding Foreclosure”.
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SOURCE: HUD News Release No. 02-104
PREPARED BY: 211 /fj
CONTENT LAST REVIEWED: January2008
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