Feds help unemployed with FHA mortgages

House made of coins

Starting next month, it’s going to be easier to hang on to your house if you lose your job and you bought or refinanced with a Federal Housing Administration loan.

FHA is telling its mortgage servicers to let unemployed homeowners go as long as 12 months without making a full mortgage payment.

The Obama administration plans to make a similar rule for homeowners in the federal government’s Making Home Affordable program, which tries to help financially troubled homeowners keep their homes.

It also hopes the private sector will be inspired to offer a similar deal to unemployed homeowners.

If your loan was guaranteed by a private investment company rather than a government entity like FHA, that company would have to agree to partial payments, as would any second mortgage lender.

Right now, FHA homeowners get four months with partial payments.

HUD Secretary Shaun Donovan says that’s not long enough because 60% of unemployed workers take more than three months to find a job and 45% are out for more than six months.

To qualify for reduced payments, you have to:

If you still don’t have a job after the year of partial payments runs out, your FHA servicer has to review your case to see if there’s another foreclosure assistance option for you and send you a letter about the results of its review.

You then get seven days to follow up with information that shows you could qualify for foreclosure assistance.

Other federal programs to help troubled borrowers include the Hardest Hit Fund and the $1-billion Emergency Homeowners' Loan Program.

In 2010, about 10,000 homeowners took advantage of the FHA’s foreclosure prevention programs, and about 3,500 FHA borrowers lost their jobs and had trouble making their mortgage payments each month, FHA officials estimate.

Changes like this one show why it can be a real benefit to get a loan that’s guaranteed by FHA, VA, or the government-sponsored enterprises Fannie Mae and Freddie Mac.

If you ever hit a tough financial patch, you’ll have more lenient loan workout options.

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