HUD Archives: News Releases
HUD No. 02-104
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
- 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;
- 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 - 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
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
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.
Read Mortgagee Letter 2002-17, which provides FHA lenders with details of the new special forbearance procedures.
Content Archived: April 9, 2010