January 29th, 2012 6:23 PM by Sam Kader MLO# 130505
Fannie, and Freddie Mac will start offering forbearance for homeowners who lost their job. Forbearance means that a lender or mortgage servicing company will either suspend, cut the mortgage payment to zero or reduce required monthly payments for a specific period of time. Forbearance is not forgiveness or reduction of the principal balance on the mortgage. Upon securing another job, homeowners are expected to pay the regular mortgage payment and to pay back the deferred amounts in affordable increments. To qualify for the program, property must be primary residence, not financed by USDA rural financing, housing ratio greater than 31% excluding unemployment benefits. Homeowners must not have any reserve greater than 12 months in PITI. Under the new rule, servicers can grant a 6 months of reduced or suspended payments without getting special permission in advance. If unemployment continues beyond six months, and if the service thinks additional forbearance for up to another six months would be appropriate it can ask Fannie or Freddie for approval to do so. During the forbearance period, borrowers will not be subject to foreclosure, even if they had fallen behind on payments before the forbearance began. Fannie Mae's policy becomes mandatory for all loan servicers March 1. Freddie Mac's policy takes effect Feb. 1. FHA has it's own program back in July of 2011.