Prepared Remarks of Secretary Shaun Donovan During a Conference Call Announcing an Extension of Unemployment Forbearance
Thank you all for joining us.
Today, I'm pleased to announce changes to FHA and the Making Home Affordable program requirements that will make a real difference for unemployed families struggling to keep their homes.
As our latest Housing Scorecard shows, we have made real progress in the fight against foreclosures.
During this crisis, FHA has been responsible for almost 900,000 loss mitigation actions to help families keep their homes.
While there's no doubt that HAMP has helped fewer people than we'd initially hoped, it has helped more than 730,000 families permanently modify their mortgages.
The federal government's foreclosure assistance programs have set a standard for mortgage modification efforts that the private market has scaled up.
All told, nearly 5 million families have received restructured mortgages since April 2009 -- more than twice the number of foreclosures completed in that time.
But of course, the job isn't over. The biggest driver of foreclosures today remains unemployment.
That's why we've made supporting unemployed borrowers at risk of losing their homes a top priority.
That includes programs like the $7.6 billion Hardest Hit Fund, which is targeted to 18 states and the District of Columbia, as well as the $1 billion Emergency Homeowner Loan Program, which provides a zero interest forgivable bridge loan of up to $50,000 to distressed borrowers in 32 states and provides additional assistance to reduce monthly payments to levels that families can afford.
Today's announcement builds on those efforts by requiring FHA-approved lenders to extend to 12 months the forbearance period for unemployed borrowers with FHA loans -- that is, the agreements lenders and borrowers make to delay a foreclosure if a borrower can catch up to his payment schedule in an agreed-upon timeframe.
We are also going to require servicers participating in the HAMP Program to extend the minimum forbearance period to 12 months wherever possible under regulator and investor guidelines.
These changes are needed because current unemployment forbearance programs have mandatory periods that aren't in line with the how long it takes the majority of unemployed borrowers to find a job.
For instance, the current minimum forbearance period in FHA is four months. Today, 60 percent of unemployed Americans have been out of work for more than three months. And 45 percent have been out of work for more than six months.
These adjustments will provide more opportunities for unemployed borrowers to stay in their homes while they look for a job.
These changes are intended to set a standard for the mortgage industry to push for more robust assistance to unemployed homeowners in the economic downturn.
Helping struggling borrowers avoid default is not only good for these borrowers -- it's good for the economy.
By reducing the number of Americans facing default, we not only reduce foreclosures -- we also reduce distress they cause to communities and local economies.
But it's important to acknowledge that today's announcement is not a silver bullet -- it won't solve all the challenges in our housing market.
The President said yesterday, "no federal program is going to be able to solve the housing problem." But he added that "the bottom line is we should be able to make some progress on helping some people."
By taking steps to move the broader market to provide more unemployment assistance, we believe today's effort helps us do just that -- representing another important tool in our toolbox that can help tens of thousands of responsible families keep their homes.
That is what this is about -- and that is why I'm proud to make this announcement today.
|Content Archived: February 23, 2017|