The Obama administration is trying to make it easier for homeowners who lose their jobs to keep their homes.
The administration today will announce that two programs providing unemployed homeowners a few months' forbearance on their mortgages will be extended to 12 months, said three administration officials speaking anonymously because the program has not been announced. Thousands of homeowners could benefit from the additional time, although not all jobless homeowners will be eligible.
The action is being taken as part of the administration's effort to help prevent foreclosures while unemployment remains above 9 percent and the economy struggles to rebound. In May, 6.2 million people 45 percent of the unemployed had been without work for at least 27 weeks. New figures are due out Friday.
President Obama said Wednesday that housing has been the most difficult problem to solve as the nation struggles to recover from its worst recession in decades.
"The continuing decline in the housing market is something that hasn't bottomed out as quickly as we expected, and so that's continued to be a big drag on the economy," he said during a Twitter town hall forum at the White House. "We've had to revamp our housing program several times to try to help people stay in their homes and try to start lifting home values up.
"We're going back to the drawing board, talking to banks, try to put some pressure on them to work with people who have mortgages to see if we can make further adjustments, modify loans more quickly," Obama said.
The Federal Housing Administration began offering four months of mortgage relief to unemployed homeowners nearly a decade ago. Banks and mortgage brokers participating in the program must comply with the new standard. The Home Affordable Modification Program has been offering three months of relief to the unemployed since last year. Those who service mortgages under the program are expected to follow its voluntary guidelines.
To qualify for mortgage forbearance, unemployed people must be looking for work. Those who can afford to pay a portion of their loans must do so.
The revised programs are intended to be a win-win for borrowers and banks, which can avoid having more homes go into foreclosure by giving borrowers more time to pay.
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