HUD No. 02-104 | For
Release Tuesday October 1, 2002 |
BUSH ADMINISTRATION INTRODUCES PROGRAM TO KEEP FAMILIES IN HOMES
Special Forbearance Initiative: HUD Uses Loss Mitigation Tool to Avoid Foreclosure
WASHINGTON
- Families with FHA-insured mortgages will receive immediate assistance
to keep a roof over their heads, thanks to an Administration initiative
announced today by HUD Secretary Mel Martinez. HUD's Special Forbearance
Initiative will permit lenders of FHA-insured mortgages to assist
creditworthy borrowers who are behind
in making mortgage payments
because they are temporarily unemployed.
The
initiative, which was recently distributed to FHA approved lenders,
is expected to help thousands of
homeowners avoid losing their homes
through foreclosure. In fiscal year 2002, the Department helped
more than 64,000 FHA-insured homeowners avoid foreclosure. That
number is expected to rise during the coming year.
"The
loss of your home because of temporary unemployment can make an
already difficult situation much worse,"
said Martinez. "The
plan that I'm announcing today will help individuals and families
with good credit records keep
their homes, and for most their largest
investment, while they look for work and get themselves back on
their feet."
Under
the terms of the initiative, a lender may enter into a written special
forbearance agreement with a borrower whose 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.
To be eligible, the borrower must:
- Have prior to this default a good payment record and a stable employment history;
- 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.
The
agreement must be 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
-- principle, 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.
HUD
is the nation's housing agency committed to increasing homeownership,
particularly among minorities, creating affordable housing opportunities
for low-income Americans, supporting the homeless, elderly, people
with disabilities and people living with AIDS. The Department also
promotes economic and community development as well as
enforces
the nation's fair housing laws. More information about HUD and its
programs is available on the Internet at www.hud.gov.
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