Under the policy changes, mortgage companies collecting payments on Federal Housing Administration-backed loans will be required to offer 12 months of forbearance for qualified unemployed borrowers, the White House said in a release.
Out-of-work borrowers with these loans now can receive a minimum of four months without mortgage payments.
Companies participating in the administration's Home Affordable Modification Program will also be encouraged to offer up to 12 months of forbearance for unemployed borrowers.
These adjustments will provide much-needed assistance for unemployed homeowners trying to remain in their homes while looking for work, the administration said.
"The current unemployment forbearance programs have mandatory periods that are inadequate for the majority of unemployed borrowers," Housing and Urban Development Secretary Shaun Donovan said. "Today, 60 percent of the unemployed have been out of work for more than three months and 45 percent have been out of work for more than six. Providing the option for a year of forbearance will give struggling homeowners a substantially greater chance of finding employment before they lose their home."
Federal housing officials said changes to MHA's Home Affordable Unemployment Program will require participating loan servicers to extend the minimum forbearance period from 3 months to 12 months for eligible unemployed homeowners, whenever possible subject to investor and regulator guidance for each mortgage loan. Additionally, forbearance under the Unemployment Program will be available to borrowers who are seriously delinquent.
All FHA-approved servicers must participate in the agency's Loss Mitigation Program, which includes the special forbearance program, housing officials said.