At least one government agency is trying to save a sizable segment of homeowners from foreclosure – the unemployed. While plenty of people are simply walking away from their mortgages because their loans are underwater, there are also plenty of Americans unable to make their payments as a result of job loss during this tough economy.
The FDIC, according to a CNN report, has asked several big banks to start reducing monthly payments for six months for those homeowners who have recently lost jobs.
Apparently, this practice called forbearance plans, has been used by banks in the past, but fewer are willing to extend a compassionate reach these days as it is not as likely that borrowers will be able to get back into the job market within a matter of months.
“With more Americans suffering through unemployment or cuts in their paychecks, we believe it is crucial to offer a helping hand to avoid unnecessary and costly foreclosures,” said FDIC chairman, Sheila Bair, on Friday.
Currently, unemployed homeowners facing foreclosure do not qualify for loan modifications under the Obama housing bailout because they cannot provide sufficient income for future payments.
The FDIC believes that aiding these normally responsible borrowers will keep the fragile and recovering housing market from more downturns. At this point, the forbearance plan recommendation will only be required of the 53 lending institutions across the country that have bought failed banks and have contracts with the FDIC. The effect will certainly be limited, but the FDIC hopes that more major lenders nationwide will see the benefit and voluntarily participate.
I have to admit, this seems like the segment of borrowers that truly need (or perhaps deserve) some extra help. I would think that in many cases these are not the homeowners that took on mortgage loans they never could afford, but simply fell prey to the vicious economy and need a little breathing room to get back on their feet. Since this isn’t a true bailout, but simply payment deferment, it seems like a pretty good idea.
ref: blog.mortgage101.com/2009/09/11/fdic-pleads-case-of-unemployed-homeowners
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